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Copy 1 



)NGRESS, ) HOUSE OF EEPEESENTATIYES. ( Eeport 

2(1 Session, \ \ No. 702. 



,a 



MEXICAN FEEE ZONE. 



March 11, 1898. — Referred to the House Calendar and ordered to be printed. 



Mr. Grosvenok, from the Committee on Ways and Means, submitted 

the following 

REPOET. 

[To accompany H. Res. 27.] 

The Committee on Ways and Means, to whom was referred the joint 
resolution (H. Ees. 27) "To repeal the joint resolution in reference to 
the Free Zone," having had the same under consideration, beg leave to 
report : 

By section 3005 of the Eevised Statutes, the right of "free" trans- 
portation in bond is accorded to adjoining countries through the United 
States and upon its railroads and other transportation systems, under 
regulations made by the Secretary of the Treasury. This right 
extended to the Eepublic of Mexico. The Eepublic of Mexico, in the 
exercise of its sovereignty, created a district of territory along its 
entire frontier bordering on the United States about 13 miles wide, in 
which territory goods and merchandise were and are admitted free of 
duty. It is called and known as the "Free Zone" or "Zona Libre." 
This right of shipment was enjoyed until March 1, 1895, when a joint 
resolution was passed authorizing and directing the Secretary of the 
Treasury to suspend this right so far as the Free Zone was concerned, 
and in pursuance thereof the Secretary did suspend said right. 

The reason for the passage of that joint resolution (vol. 28, U. S. Stat. 
L., p. 973, No. 23) was to prevent what was rej)resented as a large 
"smuggling" trade back into the United States from the "free" goods 
admitted into this zone. Earnest protest was at the time made against 
the passage of the resolution, and for the facts bearing upon the matter 
reference is here made to Congressional Eecord, volume 27, part 4, page 
2850 et seq.. Fifty-third Congress, third session. Since that time 
three years have elapsed, and the i)urpose for which the resolution was 
passed shows that it has failed. Mexico has not repealed the "Free 
Zone," and the United States has not been better protected. On the 
contrary, the only effect of the resolutioij has been to drive from our owr 
transportation lines a large traffic i"^ \ European and foreign lines — 
very large and profitable business— taut ajiy return whatever. T 
goods that should and would be sl^ Vin bond ovep our lines into 



I 



A 



MEXICAN FREE ZONE. 






territory of Mexico are now shipped by vessels to Vera Cruz aud other 
Mexican ports, in foreign bottoms and over the Mexican railroads, into 
the Free Zone, thus depriving our railroads of their legitimate business. 
These facts have been submitted to the Secretary of the Treasury and 
his opinion taken upon the adoption of the resolution now before the 
committee, and he sees no objection to such action. His letter, dated 
January 26, 1898, addressed to Hon. Nelson Dingley, chairman Com- 
mittee on Ways aud Means, is attached hereto and made a part hereof. 

We therefore recommend the adoption of the joint resolution (No. 27) 
now before the committee, and report the same back to the House with 
a recommendation that it do pass. 

The subject of the Free Zone, with its history and the variety of his- 
torical data connected therewith, is a very interesting subject; and inas- 
much as it affects the relations between this Government and the 
Eepublic of Mexico, and inasmuch as the whole subject-matter is one 
of great interest, the committee have seen fit to embody in this report a 
very able and comprehensive paper prepared by Seiior Don Matias 
Eomero, the distinguished representative of the Eepublic of Mexico at 
this capital. That gentleman has had ample opportunity to know 
whereof he writes in this behalf, having been a member of the Mexican 
Government and intimate with everything connected with the subject. 
Tour committee take pleasure, therefore, with the consent of that dis- 
tinguished gentlemen, in here presenting his paper as a part of this 
report. It is taken from the proofs of a series of papers bearing on the 
relations between Mexico and the United States that the Mexican 
minister is now about to publish in book form. 



Treasury Department, Office of the Secretary, 

Washwf/ton, D. C, January 26, 1S98. 

Sir : I liave the honor to acknowledge the receipt of a letter, dated the 2l8t instant, 
from the clerk of your committee, with which was transmitted, for an expression of 
my views thereon, House joint resolution 27, providing for the repeal of the joint 
resolution in reference to the Free Zone. 

On the 2d of February last, in reply to a letter from you, inclosing, for an expres- 
sion of the views of this Department thereon, House joint resolution 222, which is 
substantially the same as that under consideration, you were advised that there is 
abundant opportunity for the perpetration of frauds on the revenue by reason of the 
Free Zone of Mexico, and until the privileges pertaining to said Zone are abolished 
by the Mexican Government the danger to the revenue will continue to exist. The 
opinion was also expressed that the only practical result of the legislation which it 
is intended to repeal has been loss of business to American railway companies by 
reason of the diversion of the traffic to points in the Free Zone by way of Mexican 
seaports. The views then expressed are reiterated, and I see no objection to the 
passage of House resolution No. 27. 

Eespectfully, yours, L. J. Gage, 



Hon. Nelson Dingley, 

Chairman Committee on Ways and Means, House of Representatives. 



Secretary. 



THE MEXICAN FREE ZONE. 

There is in the northern part of Mexico, along its border line with the United 

States, a belt of territory exempted from certain duties, and which is called "The 

Free Zone." J 

Mexico is a country of high imporf ^ies, which, added to the protection by her 

mey having depreciated over 50 / nt, surrounds her people with an almost 

passable tariff wa^. Against iu groiind the operations of the Free Zone 



e— 



MEXICAN FREE ZONE. 6 

are thrown into strong relief, and, as the people of the United States are more con- 
cerned with this border commerce than any other people dealing with Mexico, the 
history of the zone, its influence upon trade, and the question of its permanency 
become here questions of interest. 

Unfortunately, the idea has prevailed in the United States that the Mexican Free 
Zone was established with a hostile spirit toward the United States and for the 
main purpose of favoring smuggling against the interests of the Treasury and the 
bona fide merchants of this country. 

As I was perfectly sure that such views were unsound and were based on grave 
misapprehensions, I thought it would be well — with a view to prevent misunder- 
standings, which are in the way of closer friendly and commercial relations between 
the two countries — to give a brief outline of the establishment of the Mexican 
Free Zone, and its practical results, and with that purpose I wrote an official let- 
ter to the Secretary of State of the United States, on February 10, 1888, supple- 
menting it by another on the 14th of the same month, both of which were published 
with the President's message of March 16, 1888, in answer to a resoltition of the 
Senate of February 16 of the same year, asking for information on that subject. I 
insert at the end of this jiaper the President's message and both of my letters. In 
writing the letters referred to I was prompted by a desire to promote a good under- 
standing and harmonious relations between the two countries, and I believed that 
it would not be presumptuous on my part to offer some important statements on 
that subject. When, some time afterwards, some public men, among others Mr. 
Grain, a Member of Congress from Texas, asked me for some information about the 
Free Zone, I referred him to my official letters to the State Department, published 
by the Senate ; and my statements seemed to him so satisfactory that when he spoke 
in the House on February 27, 1895, against the Cockrell resolution, on the subject 
of the Free Zone, most of his arguments were taken from my statements made to the 
State Department. 

As public documents do not always attain a wide circulation among the people of 
this country, and as I desired that my statements in regard to the Free Zone should 
have in the United States as wide a circulation as possible, I thought it would be 
expedient to embody the views contained in my two official letters to the State 
Department in an article for one of the leading magazines of this country, and I 
therefore prepared a paper, which was published in the North American Review of 
April, 1892. 

I give below that paper, which has been carefully revised and considerably 
enlarged, with a view to embrace a complete statement of this question and its 
bearings both toward Mexico and to the United States. 

My opinions about the Free Zone are at least impartial, as the official records of 
Mexico show that, far from being a friend of that institution, I have ever been its 
most earnest opponent, having been the leader of the opposition to the same both in 
the Mexican Congress and in the Mexican cabinet, as I was the only secretary of 
the treasury who had so far officially advised its abolishment. I will not, therefore, 
belittle its advantages nor imderstate its disadvantages as I understand them, my 
object being to make a full and candid statement of the question in all its bearings 
for the aforesaid purpose. 

The following is the revised paper referred to : 

Mexico has had for some years on its frontier with the United States what has been 
known as the "Zona Libre," or "Free Zone." It is a strip of territory along the 
northern' boundary of the Republic, 20 kilometers, or about 12^ miles in width, and 
extending from the Gulf of Mexico to the Pacific coast, a distance of 1,833 miles. 
Foreign goods entered for consumption within this Zone pay now only 18i per cent 
of the regular schedule of Mexican import duties. So Mexico maintains along her 
northern boundary two customs lines. Goods passing the first line are assessed 18|^ 
per cent of the import duties, and when they pass the second, 20 kilometers to the 
south, they pay the remaining 81^ per cent. This applies only to goods entered for 
consumption within the Zone, for the full tariff is collected at the first line on all 
goods intended originally for shipment into the interior, thus necessitating only one 
collection. The Zone is, therefore, of small account to the Mexican Government as a 
revenue producer, bnt has been a constant source of trouble, inasmuch as it presents 
opportunities for smuggling, and it has been greatly misunderstood here. 

It is a misnomer to call such institution a free zone, because foreign goods imported 
into it have never since its estaldishment been entirely free of duties. When the 
Free Zone was originally established, and for some time later, foreign goods paid a 
duty of 2i per cent upon the import duties destined to the respective municipalities, 
and since 188.5 they have paid a portion of the import duties, which was in the 
beginning 10 per cent and is now as high as 18i per cent. The proper name for it 
might be, therefore, a zone with discriminating or reduced duties and not a Free 
Zone. This exemption has been greatly misunderstood in this country, where the 
impression has prevailed that it was established by Mexico as an act of antagonism, 



4 MEXICAN FREE ZONE. 

if uot of unfriendliness, toward the United States, and that its main, if not its 
sole, purpose was to encourage smuggling, to the prejudice of the merchants and 
the fiscal interests of this country. 

To consider this matter impartially and fairly it is proper first to state how the 
Free Zone originated in Mexico; what vicissitudes it has suffered; what action the 
United States Government has taken in the premises; and, finally, how it affects 
the interests of both countries. 

EstaMishment of the Free Zone. — When, in pursuance of the treaty of February 2, 
1848, the Eio Grande from El Paso del Norte to the point where it flows into the 
Gulf of Mexico was accepted as the boundary line between Mexico and the United 
States, new settlements sprang up on the northern bank of the river, and things 
began to arrange themselves to the new conditions. The two nations, which so far 
had been separated by territory, very sparsely populated, were at once brought into 
close contact with each other, and it was found that the economical and commercial 
conditions on the north and south banks of the Rio Grande were in striking contrast 
to each other. In the towns of the United States, along the north bank, no taxes 
were levied and no restrictions of any kind were imposed upon internal trade. The 
import duties on foreign goods brought into the United States were at that time 
comparatively low, and this country was then attaining the full development of its 
unexampled career of material progress and prosperity. On the opposite bank, in 
Mexico, the towns were burdened by the oppressive system of taxation, which had 
come down to ns from the Spaniards. The heavy taxes, which were levied on internal 
trade, under the name of alcabalas, largely increased the cost of foreign and domestic 
goods, and the collection of these taxes made a system of interior custom-houses, 
with all their attendant evils, a necessary institution. There Avere many and very 
onerous restrictions, both upon foreign and domestic trade, and the import duties on 
foreign goods were so high as to be, in many cases, practically prohibitory. 

Many commodities were actually excluded from the country under the plea of 
protection to our national industries, and among these were articles of prime neces- 
sity, such as grain and provisions. The result of this condition of things was that 
radically different prices prevailed in the towns on the two sides of the river. At 
Brownsville, Tex., for instance, on the north bank of the Rio Grande, commodities 
and the necessaries of life, such as provisions and clothing, were bought at a low 
price, while in Matamoras and other Mexican towns, on the south bank, the same 
articles of domestic production, and often of an inferior quality, cost twice and ev«n 
four times as much as at the stores just across the river. A still greater dispropor- 
tion existed in the prices of foreign goods on the two sides of the river, and the 
cheapest commodities were always sold on the left bank of the Rio Grande. 

The difference in taxation, and consequently in prices on the frontier, necessarily 
brought about one of two results. It either caused the inhabitants of the Mexican 
towns to emigrate to the settlements on the other side of the river, in order to enjoy 
the advantages which were to be had in this country, or it induced them to purchase 
in the United States the goods which they needed, and to smuggle them across the 
Rio Grande to their homes in Mexico. 

Besides, the physical characteristics of Mexico are such that a large portion of the 
population of its Northern States contained in the valley of the Rio Grande depended 
for their supplies on the American side of the river, notwithstanding the high tariff 
of the Mexican Government. 

In 1849, the year following the adoption of the new boundary line by the two coun- 
tries, the situation on the Mexican frontier became so intolerable and disquieting 
that our Federal Congress was obliged to pass, on April 4 of that year, a law author- 
izing for three years the importation, with reduced duties, through the frontier cus- 
tom-houses of the State of Tamaulipas — the only one, excepting Chihuahua, which 
then had towns on the border — of such provisions as were needed for the use of the 
people of the frontier. Such goods had ui^ to that time either been prohibited by 
the existing tariff or had been subject to almost prohibitory duties. This law did 
not meet the exigencies of the situation because it was restricted to provisions, and 
these are not the only things that men require for life and comfort. 

On August 30, 18.52, the United States Congress passed an act by which the contrast 
between the conditions of the two sides ofthe Rio Grande was made still greater, 
and the condition of things on the Mexican side became worse than ever. By that 
act foreign goods could be sent in bond to Mexico over certain routes specified in the 
act and others to be authorized by the Secretary of the Treasury. These goods could 
be held on the frontier in the United States until a favorable opportunity should 
present itself for their exportation into Mexico, and they were exempted from all 
duties to the United States when exported from them. There was no similar privilege 
within the territory of Mexico, as all foreign goods, of whatever kind they might 
be, were there subject to the payment of duty upon their importation. 

The result was that the inhabitants of the Mexican side of the river were placed 
under such disadvantages that the public men of Tamaulipas, the State which at 
that time had towns on the border facing the border villages of Texas, came to the 



MEXICAN FREE ZONE. O 

belief that they could not live there unless they had privileges similar to those 
existing in the IJnited States. It was this belief that originated the Free Zone, and, 
in the unsettled condition of Mexico, it did not take long for such men to find an 
opportunity to bring about what they desired. 

"This statement of facts shows that the Free Zone was not really an invention of 
the Mexican authorities of the State of Tamaulipas, but an imitation, on a larger 
scale, of a similar measure enacted more than live years previously by the United 
States Government for the benefit of that portion of its territory bordering on 
Mexico. 

On February 5, 1857, we adopted our present constitution, which went into opera- 
tion on the 16th of the following September. On the 1st of December of that year, 
Gen. Ignacio Comonfort, who had just been elected President under the new consti- 
tution, was inaugurated. Two weeks later he unfortixnately issued a pronuncia- 
mieuto against the A-ery constitution to which he owedhis election, thixs undermining 
the source of his authority, and he thereupon dissolved the Federal Congress then in 
session. Almost all of the JNiexicau States refused to consent to so daring a viola- 
tion of the constitution, and many of them, especially those far distant from the 
capifal, reassumed their sovereignty, and their legistatures granted, extraordinary 
powers to the governors, in order to enable them to defend their institutions against 
those who had betrayed their trust by trying to overthrow the constitution, acting 
in this very much as some of the Brazilian States recently did when the President of 
that Kepublic, Marshal Diodoro Da Fonseca, attempted to assume the dictatorship, 
and these States exercised, consequently, all the powers belonging to an independent 
State, .as they were actually beyond the reach of the Federal Government. 

By virtue of such powers the governor of the State of Tamaulipas issued, on March 
17, 1858, a decree designed to afford a remedy for the hardships from which the fron- 
tier population of that State were then suffering. This decree established what has 
since that time been known in Mexico as the Free Zone. It exempted all foreign 
goods intended for the use of the frontier towns of that State or the ranches in their 
jurisdiction, or for trade between those towns, from all Federal duties, but not from 
municipal or State taxes. Such goods could remain in bond in the same towns, 
either at the house of the importer or at the public warehouse. The Federal Govern- 
ment not then having warehouses on the frontier, all packages had to go, of course, 
to the house of the importer. Thus goods imported into the frontier towns could 
remain stored indefinitely without paying any storage or other charges to the Federal 
treasury, and they only paid import duties when they were taken f"rom the frontier 
towns to the interior of Mexico. 

Nothing could give a better idea of the real object of the ordinance issued by the 
governor of Tamaulipas, if there were any doubt about it, than the grounds on 
which he based his action, which he stated in the preamble of his decree in the fol- 
lowing words : 

"The citizen Ramon Guerra, governor ad interim of the State of Tamaulipas: 
Whereas our towns on the northern frontier are in a state of actual decadence for 
the lack of laws to protect their commerce; and whereas, being situated in close 
proximity to a commercial nation which enjoys free trade, they need equal advan- 
tages in order not to lose their population, which is constantly emigrating to the 
neighboring country: Now, therefore, desiring to put an end to so serious an evil by 
means of franchises which have so long been demanded by the frontier trade, favor- 
ably considering the petition of the inhabitants of Matamoras, and using the extraor- 
dinary faculties with which I am invested by the decree of December 28 of the 
honorable legislature of the State, with the advice and consent of the council, I 
have seen fit to decree as follows," etc. 

The following articles of the decree contain the main provisions in regard to the 
Free Zone, and show exactly how far it was intended to go : 

"AiiTiCLE 1. Foreign goods designed for the consumption of the city of Matamoras 
and of the other towns on the bank of the Rio Bravo, Keynosa, Camargo, Mier, Guer- 
rero, and INIonterey Laredo, and for the trade Avhicla these towns carry on among 
themselves, shall be free from all duties, with the exception of municipal duties and 
such taxes as may be imposed to the end that the burdens of the State may be borne. 
In like manner, goods deposited in Government warehouses, or in warehouses belong- 
ing to private individuals, in the said towns, shall l)e free of duties so long as they 
are not conveyed inland to other towns of the State or of the Republic. The terms 
on which this trade is to be conducted are laid down in the following articles: 

"Akticle 7. Foreign goods leaving the privileged towns to be conveyed into the 
interior of the Repul)lic shall, at the time of so doing, become subject to the duties 
laid upon them by the tariff, and they shall never be conveyed into the interior with- 
out having paid, at the custom-house of their place of departure, all duties which 
are required to be -paid in the port, and without the observance of all the require- 
ments and provisions of the laws in force, in order that they may not be molested or 
detained on their way." 



6 MEXICAN FKEE ZONE. 

The governor of Tamaulipas foresaw that his decree w^ould naturally facilitate 
smuggling, to tlie loss of the Federal treasury of Mexico; but I am sure belittle 
imagined that the Treasury of the United States would suffer in consequence thereof, 
and he earnestly recommended the citizens of the State to try to prevent such a 
result by all the means in their power, as appears from the following article of his 
decree : 

"Article 8. As the privilege granted by this decree ought not to cause any detri- 
ment to the ^lational revenue, it is the duty of the inhabitants of the frontier to 
prevent, by all the means in their power, this privilege from being converted into a 
shameful smuggling traffic; it is, therefore, the duty of every inhabitant of tbe 
frontier voluntarily to become a sentinel, const;iutly on the watch to prevent smug- 
gling, otherwise the Government will be under the painful necessity of withdrawing 
this privilege by revoking the present decree." 

The governor's decree ended with the following article: 

"Akticle9. This decree shall be subject to the revision and approval of the 
legislature of the State at its next meeting in ordinary session, and to that of the 
Federal Congress when constitutional order shall be restored, although it shall go 
into force as soou as published in the privileged towns. 

"Therefore, I order it to be printed, published, circulated, and duly enforced. 

"Done at Ciudad Victoria, March 17, 1858. 

"Eamon Guerka. 

"Jose Maria Olvera, Chief Official." 

The foregoing decree was confirmed and amplified on the plea of establishing regu- 
lations for its execution by another decree of the governor of Tamaulipas, bearing- 
date of October 29, 1860. The former decree was submitted, in compliance with the 
provisions of its last article, to the legislature of the State, and also to the Federal 
Congress for their approval, and was sanctioned bj' the latter body July 30, 1861. 

New conditions are reducing very materially the scope and workings of the Free 
Zone. In former years, when the Free Zone duties were only 2^ per cent and the 
people were allowed to manufacture, the Free Zone was a benefit, and a very large 
number of articles of foreign manufacture were cheaper in the Free Zone than the 
same articles of domestic manufacture; but since the duties have been raised to 18| 
per cent ahd exchange increased to 212, very few foreign articles can be consumed in 
the Free Zone in competition with Mexican domestic goods. Therefore the rate of 
duties of 18|^ per cent, the decline in silver, and the progress of Mexico in manufac- 
turing have practically nullified all advantages. Such articles as coffee, sugar, straw- 
hats, shoes, vegetables, flour, beans, milk, fruits, meat, common clothing, blankets, 
etc., used and consumed by the poorer class of people are, if Mexican products or 
manufactures, cheaper than if imported from the United States ; and as for the other 
articles, which are generally consumed by the wealthier classes, the latter have the 
means to buy such articles and pay full duties. 

The Mexican frontier labors under great disadvantages as compared with its neigh- 
bor, and a great drawback on that frontier is that the merchants have to pay on 
their invoices the State taxes on sales. Therefore nearly all houses of consequence- 
have an office on the United States side, in order to avoid paying this tax, which is, 
in some instances, out of proportion. This could be easily changed by allowing to 
the muuicipalities or States, instead of li per cent which the present law provides, 
the additional 2 per cent known as port duties, of which the frontier towns get no- 
benefit. With this assistance of 3+ per cent to the municipalities or States, by the 
Federal Government, this tax on sales could be avoided, and the condition of things 
on the frontier would be considerably improved. 

This brief statement will, I think, be suiificient to show that the establishment of 
the Free Zone was a step taken in what was then thought to be the duty of self- 
preservation, so to speak, and imitating similar measures adopted by the Congress 
of the United States, and that it was by no means a measure approved in a spirit of 
unfriendliness, much less of hostility, toward the United States, as has been gener- 
ally believed in this country. 

For more detailed information on this subject, and especially for the English 
translation of some of the official documents bearing on the same, I refer the reader 
to a message which the President of the United States sent to the Senate on March 
16, 1888 (Senate Ex. Doc. No. 130, Fiftieth Congress, first session), and to the report 
and accompanying documents of the Committee on Foreign Affairs of the House of 
Eepresentatives, on the relations of the United States with Mexico, presented by 
Mr. Schleicher on the 25th of April, 1878 (House Report No. 701, Forty-fifth Con- 
gress, second session). 

Discussion of the Free Zone in the Mexican Congress. — I think it will not be amiss to 
say a few words about the different phases through which the Free Zone has passed 
in Mexico, since the restoration of the Republic in 1867. The committee on ways 
and means of the Fifth Mexican Congress reported, in its session of 1870, a tariff 
bill which sanctioned the Free Zone, and this matter was fully discussed during the 
latter part of October and the beginning of November of that year. 



MEXICAN FREE ZONE. 7 

Members of the calsinet have iu Mexico not only the privilege of the floor iu botli 
Honses, as in the United States, but the right to participate in the debutes and to 
express the views of the Executive. As secretary of the treasury of Mexico, I made 
a thorough study of this important aud complicated subject, and I took p;irt in the 
debate in question in the sessions of the House of the 28th and 29th of October, and 
the 4th and 5th of November, 1870, making lengthy remarks against the Kree Zone, 
which were published in English in Mr. Schleicher's report. I at that time recom- 
mended its abolition to Congress, on behalf of the Executive. The reasons that led 
me to this conclusion were mainly of a constitutional nature, namely, that the Free 
Zone constituted a privilege in favor of a State, which is prohibited by our consti- 
tution; and that although I was aware. that the situation of the frontier towns of 
Mexico required the adoption of suitable remedies, I thought that one could be 
found of such a- nature as would embrace the whole country, and be divested of the 
odious character of a privilege. My efiforts were in vain ; Congress voted in favor 
of the maintenance of the Free Zone aud its extension to answer any objections of 
its unconstitutionality; and althongh the tariff then under discussion never became 
a law,' nevertheless the vote of Congress iu favor of the Free Zone exercised great 
influen;e upon the existing and succeeding administrations, as it showed what was 
the opinion of the representatives of the people on that question. 

The abolition of the Free Zone was agitated in Mexico after I left the treasury 
department in November, 1872. When, four years later, in 1878, I was again at the 
head of that department, aud saw that it was not possible then to abolish the Free 
Zone, because the frontier influences were stronger than ever, I thought tiiat we 
ought at least to make proper regulations to prevent, as far as was possible, any 
abuses of its franchises, and the regulations of June 17, 1878, were then issued with 
that object in view. 

Extension of the Free Zone. — In the meanwhile there had been a strong reaction in 
favor of the Free Zone, as the State of Tamanlipas had taken a leading part in sup- 
port of the revolution of Tuxtepec, which succeeded in 1876, and brought about the 
administration then in power, and this was especially so during the jjresidency of 
General Gonzalez, a citizen of that State, from 1880 to 1884. 

General Diaz succeeded General Gonzalez on December 1, 1884, and in a new tariff 
act issued by him, January 24, 1885, the Free Zone, which had been up to that time 
restricted to the State of Tamanlipas, was extended to the whole frontier, namely, 
to the States of Coahuila, Chihuahua, and Sonora, and to the Territory of Lower Cali- 
fornia, for a distance of 20 kilometers from the boundary line, thereby placing it on 
a better footing than it had been before, when it appeared as a privilege confined to 
a single State and denied to others which were in exactly the same condition, an 
objection which I was the first to adxance against the Free Zone. But the same 
tariff' act which so extended the Free Zone limited considerably its franchises by 
the regulations contained in Chapter XII, 

The frontier towns and their representatives in Congress, however, exerted such 
pressure in the Federal Congress that by an act dated .June 19, 1885, the limitations 
established in that tariff' were suspended, aud very liberal regulations were again 
adopted in the succeeding tariff of March 1, 1887, which remained in force until the 
present one of June 12, 1891, was issued. This act marked a new era, in so far as 
the Free Zone is concerned, as article 696 of the same subjects all foreign goods 
coming to the Free Zone, which had been previously free of all import duties, to a 
duty of 10 per cent of the import duties levied by the same tariff', excepting cattle 
of all kinds, which had to pay full duties. That rate has since been raised to 18^ 
per cent of the import duties by a decree promulgated by the treasury department 
of Mexico on May 12, 1896, which established a duty on foreign merchandise arriving 
in the country after the 1st of July of the same year of 7 per cent upon import 
duties, to be paid in internal-revenue stamps in substitution of the duties collected 
by the interior custom-houses, which were abolished from thatdate. Another decree 
of the same depiirtment, dated June 4, 1896, established a municipiil duty of 1^ per 
cent upon import duties. I consider this provision as the beginning of anew system 
which will finally result in doing away with the institution. 

The worst blow given by the Mexican Government to the Free Zone was the clause 
of article 696 of our tariff act of June 12, 1891, to the effect that commodities man- 
ufactured in the Zone, whether of foreign or domestic raw materials should pay 
import duties coming into Mexico, outside of the Free Zone. This provision ])royed 
so detrimental to the interests of the people living in the Free Zone that after a time 

' In the papers relating to foreign relations of the United States, accompanying 
the President's message to Congress of December 4, 1871 (pp. 608,609), there is a 
letter from Mr. Thomas H. Nelson, United States minister to Mexico, dated Decem- 
ber 22, 1870, addressed to Mr. Fish, and annexed one addressed to me of December 
21, 1870, and my answer of the same date, which states exactly the condition of 
things so far as the Free Zone was concerned after the Mexican Congress had voted 
in favor of the extension of the same. 



8 MEXICAN FREE ZONE. 

they woi^ld have to give up their privileges for the sake of enjoying the same rights 
as other Mexican citizens, so far as their j)roducts and manufactures were concerned. 
But recently, on October 31, 1896, regulations were established by the Mexican treas- 
ury which allowed, Avith many restrictions, the introduction into Mexico free from 
import duties, of commodities manufactured in the Free Zone, and, although this is 
a marked advantage to the inhabitants of that Zone, the conditions required for the 
free importation of their manufactures are very burdensome, and they are by no 
means put on the same footing as those manufactured by the other inhabitants of 
the country. 

Public opinion in Mexico about the Free Zone. — As I have already observed, the 
opinion of Mexican statesmen on the Free Zone question has been divided, some 
entertaining the belief that it should be abolished because it grants to one section 
of the country privileges which are not authorized by the constitution; and others, 
and by far the larger number, holding that, under the circumstances, its establish- 
ment was an imperative necessity, as its abolition would be e(|uivalent to the 
destruction of the frontier. The friends of the Free Zone represented that the 
frontier towns of Mexico owed their existence to that institution, and that they 
could not exist without it. Through a concurrence of events, to which I shall refer 
later, many Mexicans were led to attribute to the Free ZoriC more beneficial results 
than it has really i)roduced, and this has also had a decided influence in its main- 
tenance and extension. 

The situation of the Mexican frontier up to the beginning of the civil war of the 
United States was, as I have already observed, one of poverty and even of misery, 
and formed a striking contrast to that existing on the other side of the Rio Grande. 
The war broke out almost simultaneously with the establishment of the Free Zone, 
and the situation of the Mexican frontier changed very materially as a consequence 
of the war, during its continuance, and for some time after its conclusion prosperity 
deserted the left for the right bank of the Rio Grande, on account of the general 
prostration then prevailing in the South, Avhile the Mexican border towns, and spe- 
cially Matamoras, had something like a boom.i Superficial observers attributed that 
prosperity not to its true cause, which, in my opinion, was the war, but to the Free 
Zone, and feeling convinced that it had been productive of extraordinarily faA^orable 
results, they naturally considered it as a panacea for every ill, and its extension an 
imperative necessity for the frontier. The latter opinion finally preA^ailed in the coun- 
cils of the Mexican Government, Avhich debated the question from 1877 to 1885, with 
the result, already stated, of the extension of the Free Zone to all the boundary States. 

The opinion of Mexican merchants to the south, at Saltillo, Monterey, and other 
places, is decidedly opposed to the Free Zone, and they protested vigorously against 
the gross discrimination against their interests, for, as they contend, they can not 
compete with the Zone merchants in selling goods to purchasers living within 100 
miles of the Zone, owing to the facility with which such goods can be bought therein 
and carried out by the purchasers, or bought from the smugglers who make a busi- 
ness of furnishing the interior trade with contraband goods. 

The merchants and the newspapers in the interior have always contended that the 
existence of the Free Zone on the frontier was contrary to the interests of the nation ; 
even the people on the frontier, the property owners, and practically all persons 
having the welfare of the country at heart and who have given the subject some 
thought, share this opinion. 

Right of Mexico to establish the Free Zone. — There can be no doubt as to the right of 
the Government of Mexico to exempt from duties or levy them on the foreign trade 
of the country, even though they should injure the mercantile interests of other 
nations, and I therefore think it unnecessary to argue the right of Mexico to adopt 

' The following is the testimony of a spectator of the scenes in the Free Zone dur- 
ing the war : 

"The law had but little effect upon our commerce until the opening of the civil 
war. With the Southern States in revolt, a free and neutral port on the border be- 
came at once of vast importance. Contrabands of war and supplies of all kinds could 
he bought in New York or Europe and sent to Matamoras, a neutral port. From a 
mere village Matamoras grew within three years to the third port of the world, with 
eighty vessels at a time anchored off the dangerous roads at the mouth of the Rio 
Grande. Bagdad, at the mouth, grew from nothing to 12,000 inhabitants, while 
Matamoras had 40,000, including representatives from every commercial nation in the 
world. The wickedness of the towns of Scripture fade away before that of these 
two during the years from 1861 to 1865. Men made or lost a fortune before break- 
fast buying or selling supplies or cotton. The smallest change for a gentleman was 
a $5 gold piece; for a laborer, a Mexican dollar. Cotton was wagoned from east of 
the Mississippi across the plains of Texas to seek a neutral port for export. When 
the Southern Confederacy collapsed, the Zona Libre lost all national importance and 
steadily declined in value. Matamoras still has the Zona Libre, but her commerce 
has become insignificant and her present population does not exceed 6,000." 



MEXICAN FREE ZONE. 9 

and maintain tlie Free Zone, especially as regards the United States, which, in its 
tariff laws, does not have much consideration for the interests of the commerce of 
foreign nations, and only has in view the requirements of its own citizens, no matter 
how prejudicial thej^ may be to foreign merchants, manufacturers, or producers; but 
I will only mention some reasons which seem to me rather plain. 

The rates of duties established by the tariff laws of the United States have always 
been lower than those of Mexico. In a pamphlet jiublished at El Paso, Tex., in 1895, 
by Mr. C. R. Morehead, president of the State National Bank of El Paso, who is one 
of the most determined opponents of the Free Zone, entitled The Free Zone of 
Mexico, Its Baneful Effects on the Commercial Interests of that Rejiublic and those 
of the IJuited States, the author states as follows: 

"In the year 1858 the United States of America only levied for the expenses of 
the Government an average import duty of 15 per cent on all imported articles, while 
the import duties of Mexico were from 20 to 25 per cent, thus giving the American 
border an advantage over their Mexican neighbors of 5 to 10 per cent in their com- 
mercial relations. Again, the Mexican border could only be reached by ti'aversing 
a mountainous country for long distances, and the mode of transportation being the 
most primitive (burro trains), their goods could only be transported at great expense, 
as no such conveniences as a railroad existed in the Republic at that time. This 
apparent difference in the duties, imposed upon the two banks of the river, and the 
resulting superiority of tlfe one bank over the other in commercial intercourse, was 
the cause of the establishment of the Free Zone by the Government of Mexico." 

This disproportion in the tariffs of the two countries, as Mr. Morehead acknowl- 
edged, made the commercial condition of the United States towns on the Mexican 
border a great deal more favorable than the condition of the Mexican towns. How 
would the Government of the United States have acted if Mexico had based on these 
great differences a remonstrance against the tariff' in force in this country, and 
required that it should abolish it and establish one with the same or higher rates of 
duty than the Mexican tariff' 1? And how would it have felt if remonstrances had 
been made against the building of railroads in this country tapping the frontier, 
because thereby the condition of the inhabitants of the northern border of the Rio 
Grande Avould be bettered? What would the people of this country think if we 
should ask them to repeal the act of August 20, 1852, because it encouraged smug- 
gling in Mexico? The Mexican people feel exactly as the j)eople of the United 
States would feel if the circumstances were reversed. 

It would be absurd to consider as an act hostile to this country the establishment 
by Mexico of absolute free trade — that is, the abolition of its custom-houses and 
import duties; in other words, the extension of the Free Zone throughout the whole 
country — because the United States, as a neighboring nation, would be the nation 
likely to profit most by such freedom of trade; and if such extension could not be 
justly a motive of complaint, how can it be so when the free trade is reduced to a 
very limited zone? 

Hoiv far the Free Zone favors smiigf/lmg into the United States. — Haviug explained in 
what manner the Free Zone was established and what were its real purpose and 
scope, and before I consider the action of the United States Government on that sub- 
ject, it will be proper to examine the main objections against it. 

The second impression prevailing in the United States about the Free Zone, namely, 
that it was established to injure the United States, and that it causes a very large 
smuggling of foreign goods into this country, is equally incorrect, as I will try to 
show. 

It does not seem to me reasonable to suppose that the Free Zone was established 
for the purpose of cmcouraging smuggling, to the detriment of the United States 
Treasury, when in fact it harms Mexico to a much greater extent than it does this 
country, as, in order to injure the United States, Mexico would hardly be willing to 
injure itself ten times as much; and if the contraband trade carried on under the 
shadow of the Free Zone was a sufficient reason for its suppression, the interest of 
Mexico in this matter would long since have settled the question. 

Any human institution can be abused by men. The goods stored in the frontier 
towns of the United States in accordance with the act of August 30, 1882, were easily 
smuggled into Mexico; and yet when the United States Congress jiassed that law 
it did not intend, assuredly, to encourage smuggling to the <letriment of Mexico, 
although such was practically its result. In the same numner the governor of 
Tamaulipas at tirst, and the Mexican Congress afterwards, did not intend in estab- 
lishing the Free Zone to encourage smuggling to the detriment of the United States. 

Unfortunately, the mistaken impression tlaat the Free Zone injui'cs the United 
States has made a great headway among some of the American statesmen, no doubt 
becau.se they have not carefully studied this subject. The annual loss caused to the 
United States Treasury by the Free Zone has been estimated to be as high as 
$6,000,000, as will presently appear. Secretar3" Fairchild, in a report to the Senate, 
to which I shall presently refer, expressed that opinion, which was then the general 
impression of several other officials of the Treasury Department, and even of com- 
mittees in both Houses of Congress. 



10 MEXICAN FREE ZONE. 

The only way to estimate the loss to the United States Treasury by smuggling 
through the Mexican frontier would be to examine what has been the amount of the 
importations of foreign goods from the United States into the Mexican Free Zone. 
But the United States custom-houses do not keep an account of foreign goods 
exported for consumption in the same, and as most of them go in transit to the 
interior the amount of such goods, as appears in the reports of the Bureau of Sta- 
tistics of the United States Treasury Department, only represents a small portion of 
the goods exported to the Zone which might be smuggled back into the United 
States. With a view to ascertain the exact amount of such trade, Senator Mor- 
gan, who has always taken great interest in everything relating to Mexico, thought 
it proper to inquire how much that contraband tra,de amounted to, and on Feb- 
ruary 16, 1888, he introduced in the Senate ' a resolution asking of tlie Treasury 
Department whether the Mexican Free Zone encouraged smuggling across that bor- 
der into either country, and for the estimated loss to the United States ; and in answer 
to that resolution the Secretary of the Treasury transmitted, on the 1st of the follow- 
ing March, a statement ^ from which it appears that the total value of the foreign 

1 Congressional Record, Vol. XIX., Part II, p. 1720. In the Senate of the United 
States, February 16, 1888. . 

THE MEXICAN FREE ZOKE. 

Mr. Morgan submitted the following resolution: 

"JResolved, That the Secretary of the Treasury is directed to inform the Senate 
whether and to what extent the customs laws and regulations of Mexico, in the belt 
of country known as the Free Zone of Mexico, extending along our border, have 
encouraged smuggling across that border into either country; the estimated loss of 
revenue to the United States from that cause ; the means employed, or that are neces- 
sary, to prevent such smuggling; and the additional cost to the United States of the 
necessary agencies to prevent the A^olation of its laws in consequence of the existence 
of that Free Zone." 

The resolution was considered by unanimous consent, and agreed to. 

^Fiftieth Congress, tirst session (Senate Ex. Doc. No. 108), letter from the Secre- 
tary of the Treasury in response to Senate resolution of February 16, 1888, relative 
to smuggling in the Free Zone of Mexico. March 5, 1888, ordered to be printed and 
referred to the Committee on Foreign Relations: 

Treasury Department, Office of the Secretary, 

Washington, D. C, March 1, 18SS. 

Sir : I have the honor to acknowledge the receipt of Senate resolution, dated the 
16th ultimo, directing me — 

"To inform the Senate whether and to what extent the customs laws and regula- 
tions of Mexico, in the belt of country known as the Free Zone of Mexico, extending 
along our border, have encouraged smuggling across that border into either country; 
the estimated loss of revenue to the United States from that cause; the means 
employed, or that were necessary, to prevent such smuggling; and the additional 
cost to the United States of the necessary agencies to prevent the violation of its 
laws in consequence of the existence of that Free Zone." 

In reply I have to state that the only information in possession of this Department 
relative to the sul)ject-matter of the resolution is of a general character. There is 
no doubt that the existence of the Free Zone of Mexico furnishes an opportunity for 
smuggling into the United States. 

Under the provisions of section 3005, Revised Statutes, merchandise arriving in 
the United States and destined for places in the Republic of Mexico in transit may 
be convej-^ed through the territory of the United States without payment of duties, 
under such regulations as the Secretary of the Treasury may prescribe. The total 
value of foreign merchandise which thus passed through the United States to Mexico 
during the last fiscal year was $497,654. In addition to that amount, merchandise of 
the value of $194,774 was withdrawn from warehouse and exported to Mexico, making 
a total of $692,428, of which $211,589 was dutiable and $480,839 free under our tariff. 

It has been alleged that a large proportion of the dutiable merchandise thus sent 
into Mexico is smuggled back into the United States. This Department has no means 
of ascertaining to what extent this is true. 

The principal articles, products of Mexico, which have been subjects of seizure by 
the customs officers on the Mexican border, are horses and cattle. So long as our 
present tariff on imports is continued, customs officers will be needed to collect duties 
and prevent smuggling, and I am not advised that the number and cost of such 
officials could be diminished if the Free Zone of Mexico were abolished. 
Respectfully, yours, 

C. S. Fairchild, Secretary. 

Hon. .ToHN J. Ingalls, 

President pro tempore United States Senate, 



MEXICAN FREE ZONE. 11 

merchandise which had passed through the United States into Mexico during the 
fiscal year ending June 30, 1887, was $197,654; and adding to that amount merchan- 
dise to the value of $194,774, which was withdrawn from warehouse and exported to 
Mexico, making a total of $692,428, of which only $211,589 was dutiable, the balance 
of $480,839 was free under the tariff act of March 3, 1883, then in force. So that, 
supposing that the whole of that amount had been smuggled back into Mexico, 
which could not possibly be tlie case, because some of those goods were needed in the 
Free Zone and near-by in Mexico, others legally imported and others smuggled into 
Mexico, the loss suffered by the Treasury of the United States would have been in 
reality insignificant. 

The average amount of duties under the tariff act of March 3, 1883, on the whole 
of the dutiable articles was 47.10 per cent, and tlie actual loss of revenue to the 
United States, supposing that all foreign goods imported into Mexico by the Free 
Zone should have been smuggled back into the United States, would only amount 
to $99,658, which is by no means as large as the amount estimated by the opponents 
of the Free Zone, and not so much considering the facilities for smuggling which the 
frontier affords. 

Secretary Fairchild in his answer expressed the views prevailing among the Treasury 
officials that there was no doubt that the existence of the Free Zone in Mexico fur- 
nished opportunities for smuggling into the United States; but the figures he gave 
showed that, if any smuggling had been carried on, its amount was really insignifi- 
cant. 

From an official statement, published by the Bureau of Statistics of the United 
States Treasury Department, of imports and exports of merchandise from the United 
States during the year ending June 30, 1895, the first year after the act of August 28, 
1894, went into effect, it appears that the value of the foreign merchandise which 
passed by the frontier into Mexico was as follows : Through Brazos de Santiago, 
$36,510 ; Corpus Christi, $26,738 ; Paso del Norte, $35,810, and Saluria, $32,868, making 
a total of $131,926. So that the total amount of foreign merchandise imported into 
the Free Zone from the United States in the first year after the act of August 28, 
1894, went into effect was $131,926, and supposing that the whole of it should have 
been smuggled back into the United States, the import duties on the same, at the 
rate of 41.75 per cent under the tariff then in force, would amount to $55,080, which, 
is a mere trifle, considering the conditions of the frontier. 

For more details showing how insignificant is the smuggling from the Mexican Free 
Zone into the United States, and how great the advantages that this country derives 
from the Free Zone, I refer the reader to a letter that Mr. Frank B. Earnest, collector 
of customs at Laredo, Tex., addressed on February 23, 1895, to the Hon. W. H. 
Crain, Member of Congress from Texas, to an editorial from the Lower Eio Grande, 
a paper published in Brownsville, Tex., and to a letter from prominent citizens of 
Brownsville addressed also to Mr. Crain, all of which were read by him in the House 
of Representatives on February 27, 1895. 

Even Mr. John W. Foster, who was, when United States minister to Mexico, one 
of the most decided opponents to the Free Zone, and expressed in the different offi- 
cial communications addressed to the Department of State the opinion th^t the Free 
Zone was a great detriment to tfie United States, and had been established for the 
purpose of encouraging smuggling, changed his views when he went himself to the 
frontier for the purpose of making a personal examination of the subject, and in an 
official communication (No. 1077), addressed to Mr. Evarts, Secretary of State of the 
United States, dated City of Mexico, December 26, 1879, said as follows: 

" In the past two or three years the situation has materially changed. The decline 
in price of manufactured goods in the United States and our increased spirit of 
commercial enterprise enable the American merchants on the Texas side of the 
river to compete successfully in many classes of goods with the merchants in Mexico, 
who import from Europe. The practical result is that, in cotton fabrics and many 
other articles, the Mexican frontier is supplied almost entirely from the United 
States, and the inducements for smuggling into Texas have greatly diminished. Our 
customs authorities along the Rio Grande, as well as the citizens in general, informed 
me on my recent visit to that region that the smuggling of foreign merchandise from 
the Mexican Free Zone had almost entirely ceased. On the other hand, my observa- 
tion led me to the conclusion that' this Zone was made the base of operations for 
quite an extensive system of smuggling of American (as well as European) goods 
into the interior of Mexico. 

"It is the practice of the Mexicans to cross the river to the American towns and 
purchase our cotton and other goods and introduce them without hindrance into the 
Zona Libre, whence they are clandestinely taken into the adjoining States of this 
Republic; so that the measure which was originally intended to be a protection to 
Mexican interests and an obstruction to American commerce in its practical work- 
ings is just now proving to be the contrary. While I can not regard the continuance 
of the Zona Libre as a friendly act toward the United States, my recent visit satis- 
fied me that it was a much greater evil to Mexico than to our country. The exist- 



12 MEXICAN FREE ZONE. 

euce of snc]a a discriminating territory must always be a source of annoyance, and 
ought to be abolished if we are ever to have a legitimate and cordial commercial 
intercourse between the two countries, but at present it is the occasion of greater 
damage to the government and people who created it than to its neighbors." 

Considering the matter from a disinterested point of view, it would certainly 
appear that, barring a possible increase in the temptation and opportunity to land 
and smuggle foreign goods into the United States, the Mexican Free Zone has been, 
and still continues to be, a benefit to American trade, and that any attempt to com- 
mit the United States Government to a hostile attitude toward that institution is 
only instigated by local interests. 

Smuggling on the frontier will never be prevented, as it has recently hajipened 
that people were caught smuggling several sacks of jDotatoes, which pay practically 
no duties. Even sewing machines and plows, which pay almost no duty at all, are 
smuggled. Perhaps this is due, in a great measure, to tlie conflicting and A^exatious 
documentary requirements for the importation of small articles at the froutier. If 
the Government would allow bringing into Mexico small articles up to the value of, 
say $20, without requiring any papers, then smuggling mi^ht be considerably 
reduced, and everybody would have the opportunity of accompanying the goods to 
the custom-liouse aud paying the duties there, as is done on this side, and a great 
inducement to smuggling into Mexico would disappear. 

Advantages of the Free Zone to the United States. — ^There is one aspect of this question 
which, as I believe, has so far passed entirely unnoticed. The Free Zone is really 
an advantage to the United States, since, as I have already stated, the Mexican sys- 
tem of legislation in the matter of customs and excise d.uties has generally been 
restrictive and even prohibitory, both by reason of the high import duties levied on 
foreign goods and of the existence of interior custom-houses, which prevailed up to 
the 30th of June, 1896, and also of State and nuinicipal taxes, requiring vigilance 
and restrictions that must necessarily hamper business transactions. Any relaxation 
of such a system of restriction could not but be favorable to foreign nations trading 
with Mexico, and especially to a neighboring country like the United States, whose 
agricultural products and manufactures are mainly, if not exclusively, consumed on 
the Mexican frontier. 

Under the tariff acts of October 1, 1890, and July 24, 1897, the Government of the 
United States has been trying very earnestly to obtain from foreign countries, and 
especially from the Spanish-American Eepublics, the free entry, or the admission at 
a reduced rate of duties, of some of its products and manufactures, aud they natu- 
rally feel pleased when a new agreement is made. And yet the liberal terms provided 
by Mexico in favor of the free admission of all the products and manufactures of this 
country into our Free Zone has been taken here as an unfriendly act on our part 
toward this country. 

It is a fact, which has already been commented upon by officials of the United 
States Government,^ that the merchaiits on the north side of the Rio Grande River 
who clamored most loudly against the Free Zone were the European merchants, and 
the reason is very plain. The United States has, on account of its contiguity of ter- 
ritory, lin^s of railways, etc., almost the monopoly of the goods consumed in the 
Free Zone, while the European countries can not send their goods there unless by 
long ocean routes and paying expensive railway freight, which add considerably to 
their cost and make their prices quite high. The advantages accruing from a free 
market are therefore almost exclusively enjoyed by merchants and citizens of the 
United States, and it would seem incredible that they should have often been so loud 
in their denunciations of that institution which has really been a boon for many of 
them. 

If the Free Zone has inconveniences for this country, although much less serious ones 
than those which it has for Mexico, it possesses, in my judgment, a decided advan- 
tage which has remained hitherto unnoticed. It practically makes a portion of 
Mexico a free market for all the products and manufactures of the United States, since 
merchandise of all kinds from this country may be imported into and consumed in 
Mexican territory almost duty free and be warehoused in the region of the zone for 
an unlimited time. No greater privilege can be asked for the commerce of a nation, 
and the only drawback in this respect that I can see to the Free Zone, in so far as 
the United States is concerned, is that it does not embrace the whole of Mexico. 
Supposing its privileges were extended to the whole of Mexico, would the United 
States consider the free admission of their products into that country as prejudicial 
to their interests? How strange, under this view of the question, does the idea pre- 
vailing here appear, that the Free Zone brings only injury to the United States and 
has been established to the advantage of European goods only, when 95 per cent of 
the goods imported there under its franchises are from the United States. 

iMr. Warner P. Sutton, United States consul-general to New Laredo, in an official 
dispatch, dated April 25, 1890, addressed to the Secretary of State. 



MEXICAN FREE ZONE. 13 

Estimates of the present population of the zone range from 60,000 to 80,000 souls. 
Allowing that 70,000 people hncl lodgment therein, it is evident the question is ot 
importance both to Mexico and to the United States, on account of the peculiar 
trade conditions produced by this almost free-trade belt separating two high-tariff 
countries. 

During the fiscal year ending on June 30, 1894, the United States exported to 
Mexico $12,441,805 in domestic manufactured goods and breadstuffs. Of these exports 
$6,715,688 went through the five customs districts on the northern border — Brazos de 
Santiago, Corpus Christi (Laredo), Saluria (Eagle Pass), El Paso del Norte, and 
Nogales, Ariz. Of the imports into the United States i'rom Mexico, $8,228,892 came 
through these same ports. It is impossible to arrive at any exact figures as to the 
amount consumed by the inhabitants of the Zone, but it is estimated by the customs 
officers at the five poiuts named that about 12 per cent, or about $813,890, is shipped 
into the Zone, and that only about 3 per cent of this amount is reentered for import 
to Mexico on the other side and pays the other 82^ per cent of the Mexican tariffs. 
This would give, as a result, that about $800,000 in American goods were consumed 
by the residents of the Zone. These figures are comparatively valueless in arriving 
at any idea of the purchasing power of the Zone in the line of American products, 
for the reason that this $800,000 constitutes but an item of the real consumption. 
It is a well-known fact that the residents of the Zone buy most of the goods they 
consume of a staple character from the American merchants on the north side of the 
river. Allowing 70,000 people as the population of the Zone, it would be a conserva- 
tive estimate to place the yearly trade at least as high as $3,200,000 in gold, for the 
Free Zone resident is very much dependent upon the American merchants. Based 
upon these estimates, the purchasing value of the Zone to the American trade is at 
least $4,000,000 each year, and by many who are in a position to be well informed in 
the premises it is placed at a much higher figure. 

IMsad vantages of the Free Zone to Mexico. — The events connected with the foreign 
intervention in Mexico did not prevent the natural eft'ects of the Free Zone to be 
felt in the country until the Republic returned to its normal condition; that is, until 
after the termination of the French intervention and the downfall of the so-called 
empire of Maximilian, events which took place during the year 1867. In January 
of 1868 I was called to the treasury department by President Juarez, and in my 
annual report to Congress, on September 16 of that year, I stated that one of the 
causes of the then depleted condition of the Mexican treasury was the large contra- 
band trade that was carried on through the Free Zone and enjoyed by the frontier 
towns of Tamaulipas; further remarking that the custom-houses of those towns 
were hardly able to meet their clerical and office expenses, and that this fact showed 
that the establishment of the Free Zone had not made that region prosper; and that, 
in my opinion, that institution was not the proper remedy for the evil which it was 
intended to cure. 

It is true that the privilege of the Free Zone granted to the inhabitants of the 
northern portion of Tamaulipas to import and consume foreign goods without pay- 
ing Federal duties, to store them in their own houses, and to keep them in bond for 
an unlimited time, was a powerful incentive to smuggling from the Free Zone either 
to Mexico or the United States, and that Mexico, which has suffered greatly from 
that result, has been obliged, with a view to the repression of smuggling, to estab- 
lish a costly, oppressive, and complicated system of inspection; but protection to 
smuggling was not the object of the creators of the Free Zone, nor is it possible 
that smuggling should have been carried on to the prejudice of tbe United States to 
the same extent to which it was done to the disadvantage of Mexico. 

As the duties levied by the Mexican tariff are much higher than those imposed in 
the United States, it is evident that the most lucrative contraband trade, and the 
easiest one to conduct, is that which is carried on to the detriment of the Mexican 
treasury. Smuggling is more easily carried on in Mexico, because the Mexican 
frontier is very sparsely populated, and therefore the difficulty of guarding it is 
greatly increased, while the frontier of the United States is more thickly settled 
and thus better protected against illicit traffic. 

To prevent smuggling from the Free Zone, as far as this was possible, the Mexican 
Government has been obliged to double its frontier custom-houses of inspection of 
goods imported from the United States, at great expense and considerable inconven- 
ience to bona fide merchants, as it has, in addition to the custom-houses directlj^ on 
the boundary line, with proper inspection between each of them, another system of 
custom-houses and insjjection some distance farther south, under the name of fiscal 
police, to prevent smuggling between the Free Zone and the rest of the country. 

The Free Zone law has worked such a hardship on the iiroperty owners and manu- 
facturers on the Mexican side that the losses they have sustained amount up into 
the millions, while the Republic has lost many thousands of inhabitants, as all the 
frontier towns have greatly decreased in population on account of its being impos- 
sible for them to provide work for the laboring classes. Matamoras, once a flour- 



14 MEXICAN FREE ZONE. 

ishing town of about 40,000 inhabitants, has decreased to about 4,000 inhabitants. 
Nuevo Laredo and Piedras Negras have about held their own on account of the 
railroads, but Laredo and Eagle Pass, Tex., have increased much wore in proportion. 
This same comparison may be made between Nogales, Mexico, and Nogales, Ariz. 
However, the greatest anomaly exists in El Paso del Norte. Before the Free-Zone 
law went into effect El Paso del Norte had a population of 15,000 people, and 
to-day the census shows only 8,000. In 1881, El Paso, Tex., was a village of 500 
people ; to-day it has a population of over 15,000 souls. 

The existence of the Free Zone, w ith its prohibitory laws as to manufactured arti- 
cles, has prevented the establishment of factories ; without that law it is certain that 
ere this there would have been established along the frontier smelters, soap facto- 
ries, glass factories, packing houses, machine shops, cracker factories, candle facto- 
ries, brick factories, furniture factories, whisky distilleries, etc. 

In questions of this character there are, of course, a good many conflicting inter- 
ests ; but the main question is w^hich interest the Government should really protect 
and which interest should be subordinate to others. The people who have been 
fiercely contending for the continuation of the Free Zone and bringing about the 
old rate of 2.^ per cent duties are principally owners of retail stores who import for- 
eign goods, especially European and Asiatic goods, into the Free Zone and pretend 
to sell them to both United States and Mexican people. It is well known that retail 
stores never employ any great number of clerks, whereas a factory of any kind 
would give employment to a large number of operatives and hands, and thus be of 
much more benefit to the people and to the city in general than a retail store employ- 
ing only a few persons. 

Action of the United States Government adverse to the Free Zone. — It was for some 
time a matter of wonder to me that public opinion in this country could have been so 
grossly misled on the subject of the Free Zone, and that a measure which allowed 
a free market for all kinds of products and manufactures of this country into a 
large section of Mexican territory could be misunderstood to the extent of consider- 
ing it as an offense to the United States. I can imagine, however, how it was that 
public opinion came to be so grossly misled on this subject. The Southern States 
of the United States, and especially those close to the southeastern border of Mexico, 
enjoyed great prosperity before the war of the rebellion. All foreign merchandise 
was allowed to go free of duties to the border, and was smuggled into Mexico, and 
such transactions naturally established there a very large and prosperous commer- 
cial business. The ravages of the war destroyed the wealth and commercial pros- 
perity of the South, and when the war was over towns which had been before rich 
and flourishing were prostrated and poor. The Free Zone, which had then begun 
to be in operation, allowed the Mexican towns on the other side of the Rio Grande 
to have some commercial activity, especially with the importation of domestic com- 
modities of the United States, and that naturally hurt the interests of some of the 
merchants established on the American side, especially those of European origin or 
connections. 

It is not strange, therefore, that they should attribute entirely to the existence of 
the Free Zone in Mexico what was really the consequence of the civil war in the 
United States, and of the new condition of things brought about by the restoration 
of peace, and that they should account for their depressed condition by the existence 
of the Free Zone, although in that opinion they were utterly mistaken, and per- 
haps some others were guided by a feeling of jealousy or envy for the passing pros- 
perity that the Mexican side of the line enjoyed during that war. Their complaints 
and murmurs naturally spread to the Members of Congress from the respective dis- 
tricts, and finally reached the highest ofiicials of the United States Government. As 
Mexican affairs had been then so little understood in the United States, and this 
question had not been presented in its true light, the impression finally prevailed 
that the establishment of the Free Zone was an act of hostility on the part of Mexico 
toward the United States, intended to destroy its commerce and to favor smuggling 
into this country to the prejudice of its Treasury and bona fide merchants. Of 
course, the existence of this impression afl'orded a good opportunity to anybody who 
desired to attack or abuse Mexico to do so, as was the case with Mr. Schleicher, a 
Representative from Texas, of whom I shall presently speak. 

It was in this way that almost all the representatives of the United States in Mexico 
since the restoration of the Republic in 1867, beginning with Mr. Edward Lee Plumb, 
General Rosecrans, Mr. Thomas H. Nelson, and especially Mr. John W. Foster, and 
some of their successors, seemed to labor under the impression — ^judging from the 
correspondence which they sent to the State Department on the subject, pub- 
lished afterwards by Congress — that the Mexican Free Zone was a very great 
injury to the United States; and several Secretaries of State, including such distin- 
guished men as Mr. Hamilton Fish, Mr. William M. Evarts, and others, seem (very 
likely for want of sufiQcient information) to have given the Free Zone more importance 
than it really deserved. 



MEXICAN FREE ZONE. 15 

This impression extended even to President Grant, who, in three of his annual mes- 
sages to Congress, spoke of the Mexican Free Zone, expressing the mistaken opinion 
about that institution which prevailed for so long.' 

Mr. Samiel A. Belleu, a citizen of the Unitel States, residiii';- at Brownsville, 
Tex., wrote a letter to the Secretary of the Treasury, dated in Washington on Sep- 
tember 21, 1868,' in which he said thiit the effect of the Free Zone had been most 
disastrous to tlie commerce of the city of Brownsville and other towns on the Ameri- 
can side of the Rio Grande, as well as to the revenue of the United States, and that 
prior to the existence of the Free Zone the amount of merchandise in the United 

1 [Extract from the annual message of President Grant, December 5, 1870.] 

It is to be regretted that our representations in regard to the injurious effects, 
especially upon the revenue of the United States, of the policy of the Mexican Gov- 
ernment in exempting from impost duties a large tract of its territory on our borders 
have not only been fruitless, but that it is even proposed in that country to extend 
the limits within which the privilege adverted to has hitherto been enjoyed. 

The expediency of taking into your serious consideration proper measures for 
countervailing the policy referred to will, it is presumed, engage your earnest 
attention. 

[Extract from the annual message of President Grant, December 4, 1871.] 

The Republic of Mexico has not yet repealed the very objectionable laws establish- 
ing what is known as the "Free Zone" on the frontier of the United States. It is 
hoped that this may yet be done, and also that more stringent measures may be taken 
by that Republic for restraining lawless persons on its frontiers. I hope that Mexico, 
by its own action, will soon relieve this Government of the difficulties experienced 
from these causes. 

[Extract from the annual message of President Grant, December 7, 1375.] 

The Free Zone, so called, several years since established by the Mexican Govern- 
ment in several of the States of that Republic adjacent to our frontier, remains in 
full operation. It has always been materially injurious to honest traffic, for it oper- 
ates as an incentive to traders in Mexico to supply without customs charges the wants 
of the inhabitants on this side the line, and prevents the same wants from being 
supplied by merchants of the United States, thereby, to a considerable extent, defraud- 
ing our revenue and checking honest commercial enterprise. 

1 Washington, D. C, September 21, 1868. 

Some time in the year 1857 or 18.58 the governor of the State of Tamaulipas, Mexico, 
issued a decree authorizing the merchants and citizens inhabiting the strips of terri- 
tory embraced in the portion of the State extending from the mouth of the Rio 
Grande to its farthest boundary, and from the river inland for 2 leagues, to introduce 
free of duty merchandise of all classes. 

This is known as the Zona Libre (free belt), and the decree of the governor was in 
operation for three years before it was ratified by the General Government, and is in 
full force at this time, notwithstanding the protest of the cities of Tampico and 
Veracruz against it as partial and unjust. The Government was not in a condition 
to refuse any demand on the frontier, because of the heroic defenses which the inhabit- 
ants had made against Carvajal and other raiders. The merchandise introduced 
under this decree is required to pay duties only when exported from the Zona Libre 
to the interior of Mexico, or to the United States side of the Rio Grande, and its 
effect has been most disastrous to the commerce of the city of Brownsville and other 
towns on our side of the Rio Grande, as well as to the revenue of the United States. 
No argument is required to prove this, nor can there be any doubt that it is the cause 
of the immense amount of contraband trade upon the frontier, tlie inducements to 
which are irresistible to such as are willing to engage in it, particularly in liquors 
and foreign merchandise, which can be purchased at Matamoras at a very small 
advance over the foreign cost, and their introduction into the United States at some 
point in an extended frontier of upward of 900 miles can not be prevented. 

Prior to the existence of this decree the amount of merchandise in the United 
States lionded warehouses at Brazos de Santiago and Brownsville ranged from one to 
three millions of dollars, but since that period the trade has dwindled to such a jioint 
the custom-house there, instead of being a means of revenue, is an expense to the 
United States. 

For the removal of this incubus upon the trade of the citizens of our frontier they 
are without power, but think that the relations Avhich have existed between the 
Governments of Mexico and the United States, since the passage of the decree, will 
justify prompt action on the part of the United States to terminate so flagrant an 
injustice. 

Very respectfully, Sam. A, Belden, Brownsville, Tex. 



16 MEXICAN FREE ZONE. 

States bonded warehouses at Brazos de Santiago and Brownsville ranged from one 
to three millions of dollars, and that since that period the trade has dwindled to such 
a point that the custom-house there, instead of being a means of revenue, was an 
expense to the United States; calling the Free Zone a flagrant injustice, and con- 
cluded by asking the prompt action on the part of the United States to terminate 
the Free Zone. 

Mr. Belden's personal interests might have been adversely affected by the Free 
Zone, or he might have shared in good faith the prejudices of his neighbors, due to 
the want of a proper understanding of the case. He also forgot the changed condi- 
tion of things in the South caused by the then recent civil war, but be this as it will, 
such slender grounds as those stated in his letter were made the subject of a com- 
munication addressed by the Secretary of the Treasury, Mr. Hugh McCulloch, to the 
Department of State, on September 26, 1868, ' indorsing Mr. Belden's views, and 
asserting that the Free Zone seriously affected the gi'owth and prosperity of that 
portion of the United State which borders on the Rio Grande. 

This statement of facts shows how easy it is to mislead public opinion, not only in 
complex but even in simple questions, and how difficult it is when an error is allowed 
to spread and to prevail unchallenged to bring things back to their true condition, 
the result often being not only unpleasant, but highly dangerous. 

Adverse action of the United States Congress on the Free Zone. — The mistaken opinion 
that prevailed regarding the Free Zone was naturally reflected in Congress. As early 
as June 9, 1868, Mr. Blaine introduced in the House of Representatives a resolution, ' 
which passed by unanimous consent, instructing the Committee on Foreign Affairs to 
inquire whether the action of the Mexican Government in establishing the free ports 
at Matamoras and other i^oints on the Rio Grande was not in violation of treaty stip- 
ulations and unfriendly to the commercial rights of this country. 

The Committee on Foreign Affairs called on the State Department for a copy of the 
papers relating to the subject of Mr. Blaine's resolution, and Mr. Seward sent to 
General Banks, chairman of that committee, such letters from Mr. Plumb and other 
diplomatic representatives of the United States in the City of Mexico as were in 
possession of the State Department, with his letters of December 17, 1868, and Jan- 
uary 2, 1869. With his clear mind Mr. Seward understood at once, even with the 
meager information then at hand, that Mexico had violated no right of the United 
States in establishing the Free Zone, and in his letter accompanying the correspond- 
ence in answer to the queries of the resolution he said : " I am under the impression that 
the establishment of the Free Zone, so called, is not at variance with any existing 
treaty stipulation between the United States and the Mexican Republic." 

^Mr. McCulloch to Mr. Seward. 

Treasurt Department, 

September 26, 1S6S. 

Sir: I have the honor to transmit herewith a copy of a communication, dated the 
2l8t instant, from Mr. Samuel A. Belden, of Brownsville, Tex., in reference to the 
existence on the Mexican side of the Rio Grande of a belt of country which is free 
to commerce. 

It is alleged by Mr. Belden, and it has also been represented to the Department 
through other sources, that by reason of the existence of such free belt of country 
the loss to the revenue by means of smuggling is immense and continually increas- 
ing, and that it seriously affects the growth and ]Dro8i)erity of that portion of the 
United States which borders on the Rio Grande. 

In view of these representations, it is respectfully suggested whether it would 
not be advisable to bring to the notice of the Mexican authorities the exemption of 
that section of the country lying in immediate proximity to the United States from 
customs duties and exactions which, so far as I am advised, are enforced throughout 
the residue of the Republic, thus inviting importation of merchandise with a view 
to its introrluction into the United States without the payment of duty, and impos- 
ing a heavy expense on the United States Government for the protection of the 
revenue on that frontier, without any corresponding benefit to Mexico, that I can 
perceive, which would justify a measure so injurious to a neighboring and friendly 
power. 

I am, very respectfully, H. McCulloch, 

Secretary of the Treasury. 

Hon. William H. Seward, Secretary of State. 

1 [House of Eepresentatives Journal, second session Fortieth Congress, p. 827.] 

Resolved, That the Committee on Foreign Affairs be instructed to inquire whether 
the action of the Mexican Government in establishing free ports at Matamoras and 
other points on the Rio Grande is not in violation of treaty stipulations and unfriendly 
to the commercial rights of this country. 



MEXICAN FREE ZONE. 17 

After receiring the preceding letter the committee failed to make any rejiort on 
Mr. Blaine's resolution. 

On December 6, 1869, a meeting was held in the city of Brownsville, Tex., largely 
attended by citizens of that city and the adjoining country, and the meeting ap- 
pointed Edward Downey, mayor of Brownsville, a delegate to come to Washington 
to ask Congress that measures be taken to procure from the Mexican Government 
the abolition of the Free Zone, with a view to prevent smuggling into the United 
States, and for the protection of American interests on the frontier. 

Mr. Downey, therefore, came to Washington and addressed a long memorial to 
Congress dated .January 10, 1870,' in which he repeated the assertions of Mr. Belden, 
that the Free Zone had been established by the Mexican Government as aii act of 
hostility to the United States, and for the main purjiose of encouraging the smug- 
gling of foreign goods into this country, adding that the Free Zone was the outcome 
of the efforts of European merchants ou the Mexican side of the frontier j that dur- 
ing the war of rebellion the Mexican Government sympathized with the Southern 
Confederacy, and to assist it Mexico had reduced to one-fourth the duties on muni- 
tions of war for the benefit of the Confederates, an assertion entirely at variance 
with the facts. 

He statrd that the loss suffered by the United States Treasury in consequence of 
the smuggling carried ou by the Free Zone was estimated from one to six millions of 
dollars a year, and asserted that the Free Zone had been extended through the whole 
Mexican frontier with the United States, when that extension did not take place 
nntil 1885. How far was correct the assertion regarding the supposed sympathy of 
the Mexican Government with the Confederates will appear from what 1 have already 
stated, and from the facts that I will mention in considering Senator Patterson's 
report, which accepted the same assertion. This memorial was referred to the Joint 
Select Committee on Retrenchment, which did not take any action on the same. 
Fortunately a remarkable change of feeling has taken place in Brownsville, in so far 
as the Free Zone is concerned, as will be seen further on. 

Public men in the United States, or at least some of them, had been for some time 
under the impression that the Avay to abolish the Free Zone was to repeal the acts 
which allowed foreign mercliandise to go in bond to frontier custom-hoiises; as if 
Mexico was very anxious, which was by no means the case, that the border towns of 
the United States should enjoy that privilege; and this accounts for the efforts made 
to repeal such acts, which were always unsuccessful until Mr. Cockrell passed his 
bill, to which I will presently refer. 

In accordance with this view, Senator Patterson, of New Hampshire, introduced 
on April 9, 1870, in the second session of the Forty-first Congress, a bill- to repeal 
all existing laws authorizing the transportation and exportation of goods, wares, 
and merchandise in bond to Mexico, overland or by inland waters, and for other 
purposes, which was referred to the Joint Select Committee on Retrenchment. 

That conuuittee reported favorably to the Senate Mr. Patterson's bill on May 16, 
1870. The report was i3resented by Mr. Patterson himself, and shows a complete 
misunderstanding of the case. It repeats the charges made l)y Mr. Belden, Mr. 



\ 



^ Mr. Downey's memorial is published as Senate Mis. Doc. No. 19, Forty-first Con- 
gress, second session, and being a lengthy paper and full of errors and misrepre- 
sentations, I will not insert it here. 

- Forty-first Congress, second session (Senate, 783). In the Senate of the United 
States, April 9, 1870, Mr. Patterson asked, and by unanimous consent obtained, leave 
to bring intlie following bill, which was read twice, referred to the Joint Select Com- 
mittee on Retrenchment, and ordered to be printed: 

A BILL to repeal all existing laws autliorlzingthe traTispni'tatioii and exportation of goods, wares, and 
inercliandi.ie in bond to Mexico, overland or by inland waters, and for other purposes. 

Be it enacted bij the Senate and Rouse of Bepreseniatires of the United States of Amer- 
ica in Conr/ress assembled, That all existing laws authorizing the transportation and 
exportation of goods, wares, and merchandise in bond to Mexico, overland or by 
inland waters, be, and the same are hereby, repealed. 

Sec. 2. And he it fin-thpr enacted, That all existing provisions of law authorizing 
the jiayment of drawback upon goods, wares, and merchandise exported from the 
United States to ports or places in Mexico north of parallel twenty-three degrees 
thirty minutes north latitude, or the cancellation of boiid.s given for the exportation 
and landing of goods, wares, and merchandise at such ports and places be, and the 
same are hereby, repealed; and nil authority to issue certificates in respect to the 
landing and delivery of goods, wares, and merchandise, conferred l)y law upon mer- 
chants and consuls of the United States resident at places in Mexico north of said 
parallel, is hereby revoked. 

Passed the Senate without amendment June 9, 1870, but failed in the House of 
Representatives. 

H. Eep. 702 2 



18 MEXICAN FREE ZONE. 

Downey, and others, giving them, on account of Mr. Patterson's position, a great 
deal more importance than they had before. It assumes that the establishment of 
the Free Zone in Mexico was a hostile act against the United States, decreed for the 
purpose of defrauding her revenues ; that the Mexican Government had sympathized 
with the rebellion, and had, for the purpose of assisting it, altered her revenue laws, 
with a view to allowing contraband trade through Mexican territory ; both state- 
ments being entirely incorrect. 

The idea that the Mexican Government sympathized with the so-called Southern 
Confederacy and assisted it materially is simply preposterous, as everybody knows 
that Louis Napoleon, availing himself of the civil war in the United States, tried to 
establish an European empire in Mexico, with the ultimate purpose of acquiring a 
foothold in that country, and the Mexican people and the Mexican Government were 
therefore as anxious as the most patriotic of the Union men in this country to have 
the Union restored, if for no other reason than to obtain the restoration of the 
republic in Mexico; and the soundness of these views was fully confirmed by the 
subsequent facts. 

I have reviewed carefully all the laws and regulations issued by the Federal Gov- 
ernment of Mexico from 1861 to 1865, while the civil war lasted in the United States, 
and the only act that I find concerning either cotton or commerce with the Southern 
States is one issued by President Juarez, under extraordinary powers, at San Luis 
Potosi, on July 28, 1863, for the purpose of establishing an additional duty of 1 cent 
per pound on national and 2 cents per pound on foreign raw cotton, to be paid at the 
place of consumption ; and that duty, far from being a discrimination in favor of the 
Confederates, was, in the nature of things, a heavy tax on their principal product. 

Under the regulations of the Free Zone, all goods that came to the same were free 
of import duties, and only paid them when they were taken outside of the Free Zone 
to be imported into Mexico. Any cotton imported into Mexico from the United 
States or from any other country, therefore, which did not go outside of the limits of 
the Free Zone, was not liable to the payment of duties and could be freely exported. 
General Vidaurri, who in 1861 was the governor and military commandant of the 
State of Nuevo Leon, with authority over Coahuila and Tamaulipas, issued an order 
on April 5, 1862, levying transit duties of 1 cent per pound upon all cotton which 
had come free of duty to the Free Zone and was reexported from the same.' 

The only object of General Vidaurri was, of course, to obtain revenue for his State 
government, and not to assist in the exportation of cotton through the Mexican 
frontier. If anybody had any right to complain of that duty it was the officials 
and the people of the so-called Confederate States, as the duty was a charge upon 
their main product, which at the time had a very high price, and was almost their 
only export abroad. I understand that even that duty was later increased to 1^ 
cents per pound, but I have not been able to find the act establishing that increase. 

Senator Patterson could not have understood fully the nature of the Free Zone 
and the conditions of the case, as otherwise I do not think he would have found 
fault with the Mexican officials for not forbidding the export of foreign cotton 
through Mexican ports. As no international law or act of comity could prevent the 
transit of such merchandise through Mexico, for the sole reason that the Southern 
States of this country had rebelled against the Federal Government, the Govern- 
ment of Mexico could not close its jjorts to the exportation of goods from the 
Southern States ; and to do so would have been equivalent to an alliance with the 
United States against the Southern States, and although the Federal Government of 
Mexico desired at heart the success of the Union, especially for the reason that its 
success insured the prompt end of the French intervention in Mexico, it would not 
have been justified in taking that step. 

I I give below the order of General Vidaurri, which created a tax on foreign cotton 
exported from Matamoras : 

Military Department of Tamaulipas. 

Taking into consideration the increased expenses that have to be incurred by rner- 
chants dealing in cotton, who bring this article in order to reexport it, and it being 
desirable to increase, if possible, the arrival at this port of merchant vessels, I have 
deemed it proper to grant, in view of the petition presented for such purpose by the 
American citizen, J. A. Quintero, that hereafter all cotton imported to be reexported 
shall pay as the only and entire duty the sum of $1 per quintal or hundredweight. 
I communicate the same to you so that it may be duly complied with, and I renew 
you the assurances of my esteem. 

God and Liberty. 

Monterey, Ajjril 5, 1862. 

Santiago Vidaurri. 

To the Citizen Collector of the Maritime and Frontier Cuatom-House of Matamoras. 



MEXICAN FREE ZONE. 19 

Senator Patterson's bill, reported favorably and withotit amendment by tbe Joint 
Committee on Eetrencbment on May 16, 1870,' passed the Senate without amend- 
ment on June 9, 1870. In the House of Representatives it was referred to the Com- 

[1 Forty -first Congress, second session. Senate Eeport No. 166. In the Senate of the United States, 
May 16, 1870. Ordered to be printed.] 

Mr. Patterson made the following report (to accompany bill S. No. 783) : 

"The Joint Select Committee on Retrenchment, to whom was referred Senate bill 
No. 783, ' to repeal all existing laws authorizing the transportation and exportation 
of goods, wares, and merchandise in bond to Mexico overland or by inland waters, 
and for other purposes,' having considered the same, respectfully submit the follow- 
ing report : 

"The object of the bill is to protect, so far as it can be done by legislation on our 
part, the revenue of the United States and the interests of our frontier bordering on 
the Rio Grande from the losses and injuries resulting from the facilities for smuggling 
afforded by the laws which it it proposed to repeal, and by the existence of the Zona 
Libre, or Free Belt, on the Mexican side of the Rio Grande. 

" Prior to 1858 the American towns enjoyed greater commercial advantages and 
were much more thrifty and populous than their Mexican neighbors on the opposite 
side of the river. 

"By the act of August 30, 1852, the transportation to Mexico of goods in bond was 
permitted by certain routes specified in the act, and by such others as the Secretary 
of the Treasury might prescribe. This enabled American merchants to store larger 
quantities of goods in our bonded warehouses until a favorable opportunity arrived 
to withdraw them for consumption or for exportation in bond to Mexico. 

"It is simply an impossibility to prevent smuggling on such a line as that formed 
by the Rio Grande, so long as a sufficient inducement to smuggle exists, and doubtless, 
at that time, there was considerable smuggling from the American side of the river, 
to the detriment of the revenue of Mexico and the legitimate commerce of her mer- 
chants, who were unable to compete successfully Avith those whose goods had paid 
only the lower rate of duty then required at the American ports, or, having been 
exported from the United States in bond and smuggled into Mexico, had escaped 
payment of duties to either nation. 

"On the 28th day of December, 1857, the legislature of the State of Tamaulipas 
passed an act creating the Zona Libre, which was promulgated March 17, 1858, by 
decree of Ramon Guerra, then provisional governor of Tamaulipas. The immense 
amount of smuggling on the Rio Grande, and the necessity for the repeal of our laws 
authorizing the exportation of goods in bond to Mexico, are mainly in consequence 
of that act. 

"As the Zona Libre promises to be a matter of considerable interest to the coun- 
try, we give the decree establishing it in full in the appendix to this report ; also 
the testimony of competent witnesses showing its effects on our revenue and the 
prosperity of the frontier. 

"The object of the act is clearly shown in the preamble, where it is recited 'that 
the villages on the northern frontier are found in a really ruinous state,' and that 
the decree is issued ' that they may not be entirely depopulated by emigration to the 
neighboring country.' 

" By the first article of the decree foreign goods are admitted to Matamoras and 
other towns in the State of Tamaulipas on the Rio Grande free of duty, except such 
as might be imposed for local purposes, which were mainly municipal and trifling in 
amount. 

"Article 2 invites merchants established on the American bank of the river to 
transfer their business and effects to the other side, and grants special facilities and 
privileges for doing so. The other articles are mainly occupied with the regulations 
for the transfer of merchandise from the Zona Libre to the interior of Mexico. 

"That the result of this decree was not unanticipated by its authors is clearly 
shown in article 8, in which the inhabitants are invoked 'to impede, by every 
means in their power, the conversion of this benefit granted to them into a shame- 
less contraband traffic' 

"The purpose of the act was evidently to build up the Mexican towns at the 
expense of their American neighbors, which was to be accomplished by furnishing 
to smugglers, for hundreds of miles along a frontier that it is impossible to guard, 
a safe and convenient place of deposit for goods which they received free of duty 
until a convenient opportunity should occur to smuggle them into the United States. 
The inevitable result was the destruction of the commerce and prosperity of the 
American towns and great frauds, estimated at from $2,000,000 to $6,000,000 per 
annum, on the revenue of the United States. 

"The General Government of Mexico hesitated to approve an act so hostile to the 
interests of a friendly nation, and it was not until July 30, 1861, when Texas was 



20 MEXICAN FREE ZONE. 

mittee on Commerce, but it was not rei^orted Iby tliat committee, and consequently 
failed. 

Senator Reagan, from Texas, following in the footsteps of Senator Patterson, intro- 
duced in the Senate of the United States, on January 6, 1890, a bill to prevent the 

in the possession of the so-called Confederate States, to whom the Zona Libre would 
, be of great advantage, that it received the sanction of President Juarez. 

" During the war the towns of the Zona Libre furnished free ports of entry for the 
Confederates, through which they exported their cotton and received in return large 
supplies of arms and other munitions of war. I'he Mexican Government, while pro- 
fessing friendship for the United States, sympathized with the rebels and aided them 
by every means in its power. It modilied its customs regulations so as to facilitate 
the exportation of cotton and the return of war material, and while the Confederate 
ports were blockaded by our cruisers permitted merchandise and munitions of war 
imported into the Zoua Libre to be transferred to the Confederacy at one-fourth the 
rate of duty required on the same articles when shipped to other countries, or even 
taken to other iilaces in Mexico. Under the guise ot friendship and neutrality the 
Mexican Government did ns more harm during the late war than it could have done 
if opeuly hostile, for in that case we could have easilj' blocl-caded the mouth of the 
Rio Grande, and have completely cut olf that great source of Confederate sujjplies. 

''Since the close of the war the Zona Libre lias served as a base from which smug- 
gling into the United States can be safely carried on. The American towns have 
decayed and the Mexican towns have nourished in proportion, so that instead of 
being in a 'really ruinous state,' and liable to be 'entirely depopulated by emigra- 
tion to the neighboring country,' as they were in 1858, they contained in 1868 a 
poimlation more than three times as large as that of their American neighbors that 
ten years before were threatening to absorb them. Honest merchants, unable to 
compete with the smugglers, have been compelled to abandon the country or to 
engage in illicit trade themselves, and the whole community on both sides of the 
river has become so thoroughly demoralized that smuggling is generally considered 
a legitimate and honorable business. The desperate characters whom this condition 
of things has attracted or created plunder private citizens as well as defraud the 
Government, and frequently make raids into Texas and drive large herds of cattle 
across the river into Mexico. It is estimated by well-informed men that the loss by 
these raids is sometimes as high as 200,000 head a year. 

"The prosperity of the whole frontier is paralyzed by the existence of the Zona 
Libre. The revenue of Mexico suffers as well as our own. By the decree of Ramon 
Guerra, only goods consumed in the Zona Libre were exempted from duty; but, 
although the importations exceed many times the amount that can be consumed by 
the ]5opulation of that territory, the custom-houses collect barely enough to pay 
their own expenses. 

"The secretary of the treasurv of Mexico, in his report, published in the fall of 

1869, says : 

" 'Another of the causes which have contributed most powerfully to diminish the 
product of the public rents, and especially "that of importation duties, has been the 
institution of the Free Zone, enjoyed by the frontier of Tamaulipas. The establish- 
ment of this institution, owing in the beginning to the desire of favoring the fron- 
tier population of Tamaulipas, constitutes an exception which can with difficulty 
be sustained according to good economical principles, and which has given and will 
still give margin for abuses and frauds of importance by which suffer greatly the 
commerce of good faith and the Federal exchequer.' 

"Soon after the restoration of order, the attention of the Mexican Government 
was called to the injuries resulting to both countries from the existence of the Zona 
Libre, and to the unfriendly spirit shown by enacting for the territory bordering on 
our frontier different customs regulations from those which existed in other parts of 
the country, by which the enforcement of our laws and the prevention of frauds on 
our revenue were made impossible. The President and heads of the executive 
departments admitted the justice of our complaints, and gave reason to hope that 
the decree establishing the Zoua Libre would be abrogated at the next session of 
Congress. No action was taken by the Mexican Congress until December last, when, 
instead of abrogating the decree, they extended it so as to include the States of 
Nuevo Leon and Coahuila. 

"The following extract from an article which appeared in La Cronica, March 18, 

1870, and which it is understood was written by a distinguished member of the Mex- 
ican Congress, will show the spirit in which this extension was made and the manner 
in which the Zona Libre is regarded by the enlightened statesmen of Mexico: 

_ " 'The newspapers of the United States are full of comjjlaints against the institu- 
tion of the Free Zone on our northern frontier. The evils resulting therefrom to the 
Treasury and the commerce of their country are serious, and they denounce the meas- 
ure as contrary to the reciprocity which should exist between the two countries. 
For ourselves, from the time the establishment of the Free Zone was discussed in 
Congress, it never seemed to us a measure favorable to the interests of Mexico, and 



MEXICAN FREE ZONE. 21 

transportatiou of merchandise in bond throngli the ports and territory of the United 
States into the Republic of Mexico, and to restore that privilege whenever the Zona 

we believed further that it would tend to destroy the relations of friendship existing 
between the two nations. 

" ' We remember that Congress was deluded by the assurance that the institution 
of the Free Zone injured the commerce of the United States, and for this reason 
favored the interests of Mexico. We admit the former i:)ropi)8iti()u, but are far from 
expecting that the latter will prove true. We do believe, after having studied the 
question, that the Free Zone injures both nations; the United States, because all 
that frontier being a free port, the merchants of the American side will come to our 
territory to store their goods and watch for an opportunity to introduce them in a 
clandestine manner into Texas. Thus Mexico will be in the position of a person 
who injures himself and at the same time injures his neighbor. 

" ' It was said in Congress that Mexico was free to dictate her own laws. Nobody 
can doubt that she has this right, but neither can we disregard the obligations 
imposed upon nations by natural law not to make themselves bad neighbors, one to 
the other,' 

" With a knoAvledge of the course pursued by Mexico during the war and of the 
feeling toward the United States which now animates the majority of her Congress, 
it is useless to expect anything from her friendship or her justice. 

" We must depend wholly on ourselves and must protect our revenue by the best 
means in our power. This can be partially effected by the passage of the proposed 
bill. Large quantities of merchandise are transported in bond from other parts of 
the United States, mainly from Indianola, Galveston, and Corpus Christi, to the bank 
of the Rio Grande, and ostensibly crossed over into Mexico. Of this the certificate 
of an American consul, or, where there is no consul, that of two merchants, is con- 
sidered sufficient evidence, and on the return of such a certificate the bond is can- 
celed. Where nearly all the inhabitants are engaged in smuggling such certificates 
are not difBcnlt to obtain. No inconsiderable portion of those goods ever cross the 
river, but after proceeding for a few miles in the direction of the place to which they 
are professedly destined they are carried into the chaparral, taken from the original 
packages, and thereafter transported with perfect impunity into the interior. After 
the requisite time the certificate that they have been landed in Mexico is returned, 
signed, as required, by two merchants, and the bond is canceled. Sometimes the 
goods are actually carried across the river, but the greater portion soon find their 
way back into the United States without the payment of duties. 

''The Northern States of Mexico are mainly dependent for their supplies on goods 
transported in bond across a portion of our territory. 

"The Secretary of the Treasury has lately issued orders discontinuing routes 
designated by the Treasury Department pursuant to the provisions of the act of 
August . 0, 1852. By the passage of the proposed bill the other routes authorized 
by that act will be closed, and the transit trade in bond, with all the smuggling 
resulting therefrom entirely stopped. 

" The cost of supplies for the Northern States of Mexico will be increased by the 
expense of transportation over long, difficult, and unsafe routes, or, if received by 
the same routes as at present, by the addition of the United States duty, which 
must then be paid, so that it will be for the interest of the people of those States to 
join with the party already opposed to the Zona Libre in demanding its abolishment. 

"The passage of the proposed bill will prevent smuggling, so far as it is perpe- 
trated under cover of our laws authorizing the exportation of goods in bond, but it 
will not prevent the smuggling into the United States of goods originally imported 
into Mexico, and will therefore prove only a partial remedy. No elfectual preven- 
tion of smuggling across the Rio Grande can be devised, except such as will require 
the concurrent action of Mexico. 

" The State Department has been in correspondence with the Mexican Government 
for two years past in relation to the Zona Libre, and, although the President and 
executive officers of that Government have expressed their sense of its injurious 
effects on both countries, and their desire for its abolishment, the only practical 
result has been, as was before stated, its extension by Congress over two more States. 

"The hope of successful negotiations seems to have been exhausted. In violation 
of her own constitution, which prohibits the enactment of revenue laAvs unequal in 
their effect, Mexico still persists in maintaining along our frontier a belt of territory 
to which goods are admitted free, while imports to all other portions of the country 
are required to pay a heavy duty. Unfriendly is the mildest term by which such 
conduct can be characterized. A due consideration for the protection of our own 
interests may render other measures requisite to induce Mexico to regard the comity 
of nations and observe toward us such a course of conduct as is essential to the 
maintenance of friendly relations between neighboring countries. In so delicate and 
important a matter the committee olfer no suggestions, but simply report the facts 
connected with the existence of the Zona Libre for the consideration of Congress, 
and recommend the passage of the proposed bill without amendment." 



22 MEXICAN FREE ZONE. 

Libre along the boundary line between the two countries shall be abolished,' which 
was referred to the Committee on Commerce, and reported adversely on June 25, 
1890, by Mr. Cullom, of that committee, and after being debated was recommitted on 
July 1, 1890. 

Senator Reagan was not satisfied with that decision, and on the same day, July 1, 
1890, he presented substantially the same bill, with only a few verbal alterations, as 
an amendment to Senate bill 1642,^ which was referred to the Committee on Com- 
merce, but that committee did not take any further action on the subject and the 
matter rested there. 

A similar measure finally passed Congress on February 27, 1895, and became the 
joint resolution signed by the President March 1, 1895, and of which I will presently 
speak. 

Marauding on the frontier. — The close connection that marauding on the frontier 
had with the Free Zone question from 1872 to 1879 makes it necessary to say a few 
words about this incident. 

The unsettled condition of the frontier at the time caused marauders to prey upon 
both sides of the border, Texas often being the victim ; and for this the Mexican 
Government was not responsible, but on the contrary exerted itself as far as it could 
to prevent and punish such offenders. There were at the time also Indian raids, 
made especially by the Indians living in the United States, which at times were 
given permission to leave their reservations and hunt in Mexico, where they com- 
mitted terrible crimes, from which sometimes the Texas settlements suffered, and all 
this contributed to establish a condition of unrest on the frontier. Members of Con- 
gress from Texas thought very likely the Mexican Government w as somewhat respon- 
sible for such occurrences, and they exerted themselves to place the responsibility 
upon Mexico. 

[I Fifty-first Congress, first session. (S. 1642.) In the Senate of the United States. January 6, 1890, 
Mr. Reagan introduced the following bill; which was read twice and referred to the Committee on 
Commerce. June 25, 1890, reported by Mr. CuUom adversely.] 

A BILL to prevent the transportation of merchandise in bond through the ports and territory of the 
United States into the Republic of Mexico, and to restore that privilege whenever the Zona Libre 
along the boundary between the two countries shall be abolished. 

Be it enactedby the Senate and House of Bepresentatires of the United States of America 
in Congress asseniMed, That after thirty days from the passage of this act it shall be 
unlawful for any person, firm, or corporation to transport any merchandise in bond 
through the ports or territory of the United States into the territory of the Republic 
of Mexico; and any person, firm, or corporation violating the provisions of this sec- 
tion shall be liable to a fine of not less than one thousand dollars and to im^jrison- 
ment for a term not exceeding one year. 

Sec. 2. That if the Republic of Mexico shall at any time abolish said Zona Libre, 
and shall give notice of that fact to the President of the United States, he shall, upon 
the receipt of such notice, by proclamation restore the right to transport merchan- 
dise through the ports and territory of the United States in bond into the territory 
of the Republic of Mexico as now permitted by law. 

2 [Fifty-first Congress, first session. (S. 1642.) In the Senate of the United States. July], 1890, 
Referred to the Committee on Commerce and ordered to be printed.] 

AMENDMENT intended to be proposed by Mr. Reagan to the bill (S. 1642) to prevent the transpor- 
tation of merchandise in bond through the ports and territory of the United States into the Repub- 
lic of Mexico, and to restore that iirivilege whenever the Zona Libre along the boundary between 
the two countries shall be abolished, viz : Strike out all after the enacting clause and insert the 
following : 

That after thirty days from the passage of this act it shall be unlawful for any 
person, firm, or corporation to transport any merchandise in bond through the ports 
or territory of the United States into the Zona Libre or Free Zone of the Republic of 
Mexico; and any person, firm, or corporation violating the provisions of this section 
shall be liable to a fine of not less than one thousand dollars and to imprisonment 
to a term not exceeding one year. But this act shall not be construed to prohibit 
the transportation of such merchandise into any part of the territory of Mexico 
where duties on imports are required to be paid by that country; and the Secretary 
of the Treasury shall make such rules and regulations as may be necessary to carry 
into effect the provisions of this act. 

Sec. 2. That if the Republic of Mexico shall at any time abolish said Zona Libre, 
and shall give notice of that fact to the President of the United States, he shall, 
upon the receipt of said notice, by proclamation, restore the right to transport mer- 
chandise through the ports and territory of the United States in bond into any port 
of the territory of the Republic of Mexico as now permitted by law. 



MEXICAN FREE ZONE. 23 

Mr. John Hancock, a Member of Congress from Texas, succeeded in having a joint ^ 
resolution passed by Congress, which was approved on May 7, 1872, to appoint a 
special commission of three persons to inquire into depredations by bands of Indians 
and Mexicans who crossed the Kio Grande into the State of Texas, and in pursuance 
of that resolution President Grant appointed Messrs. Thomas P. Robb, Richard H. 
Savage, and Thomas O. Osborn as commissioners to investigate such depredations. 
Mexico, on her part, appointed a similar commission for the purpose of ascertaining 
the marauding which had taken place in her territory. 

The United States commission presented in 1872 a preliminary report which was 
submitted to Congress by President Grant with his message of December 16, 1872. In 
that report the commissioners said, referring to the Free Zone, as follows : 

"The harassing question of the Zona Libre it does not fall within the province of 
the commissioners to examine, but they feel called to notice the extension of this 
zone in opposition to the most friendly remonstrances of the United States as 
another evidence of the spirit which has characterized the policy of the Mexican 
Government in its dealings with the United States for a series of years." 

What has already been said about the extension of the Free Zone shows how 
greatly misinformed were the United States commissioners on the subject. 

The final report of the commission, made on June 30, 1873. to the Secretary of 
State containing no proposal on the Free Zone, was communicated by President 
Grant to Congress with his message of May 26, 1874. 

President Grant, in his annual message of December 7, 1874, said in reference to 
the marauding on the frontier : 

" * * * Marauding on the frontier, between Mexico and Texas, still frequently 
takes place despite the vigilance of the civil and military authorities in that quarter. 

" * * * It is hoped that the efforts of this Government will be seconded by 
those of Mexico, to the effectual suppression of these acts of wrong. 

Which shows that in President Grant's opinion the Mexican frontier had also 
suffered by the marauding. 

From 1876 to 1878 the relations between Mexico and the United States were in a 
critical condition, owing especially to the efforts of Mr. Gustav Schleicher, a Member 
of Congress from the Sixth district of Texas, born in Darmstadt, Germany, and who 
had served in the house of representatives and senate of the Texas legislature, 
having been elected to the Forty-fourth Congress and reelected to the Forty-fifth 
and Forth-sixth Congresses of the United States, although he died before the begin- 
ning of his last term. Guided either by a great zeal to serve the interests of his 
State, or because he desired to precipitate some trouble with Mexico, he exerted him- 
self in an extraordinary manner to make it appear that Mexico was giving great 

' [Resolution not of general nature — No. 4.] 

■JOINT EESOLTJTION appointing commissioners to inquire into depredations on the frontiers of 

the State of Texas. 

Whereas there are complaints of many depredations having been committed for 
several years past upon the frontiers of the State of Texas by bands of Indians and 
Mexicans who crossed the Rio Grande River into the State of Texas, murdering the 
inhabitants or carrying them into captivity, and destroying or carrying away the 
property of the citizens of said State; as also that bands of Indians have committed 
and continue to commit like depredations on the property, lives, and liberty of the 
citizens along the northern and northwestern frontiers of said State: Therefore, 

Resolved by the Senate and House of Eepresentatives of the United States of America 
in Congress assembled, That the President of the United States be, and he is hereby, 
authorized and empowered to appoint three persons to act as commissioners to 
inquire into the extent and character of said depredations, by whom committed, 
their residence, or country inhabited by them, the persons murdered or carried into 
captivity, the character and value of the property destroyed or carried away, from 
what portions of said State, and to whom the same belonged. 

Sec. 2. That it shall be the duty of said commissioners, or a majority of them, as 
soon as practicable, to proceed to the frontiers of said State and take the testimony, 
under oath, of such witnesses as may appear before them, after having given notice 
i'or ten days previous, by publication in the nearest newspaper, of the time and place 
of their meeting, of all such depredations, when, where, by, and upon whom com- 
mitted, and shall make up and transmit to the President full reports of their said 
investigations. 

Sec. 3. That said commissioners shall be entitled to and receive as compensation 
for their services, the sum of $10 per day each, and their traveling expenses to each, 
for and during the time they shall be engaged in said service ; and the sum of $6,000, 
or so much thereof as may be necessary, be, and the same is hereby, appropriated 
to pay the expenses of said investigation and said commissioners. 

Approved, May 7, 1872. 



24 MEXICAN FKEE ZONE. 

cause of offense to the United States, and that this country had to take the necessary- 
means, even at the cost of war, to stop such imaginary aggressions. 

On January 6, 1876, the House of Representatives passed a resolution introduced 
by Mr. Schleicher to the effect: 

"That the portion of the President's Message which refers to the inroads, rob- 
beries, and murders along the Mexican border in Texas be referred to a special 
committee of five Members, with instructions to inquire into the causes and the 
nature and extent of these depredations, and the measures that might prevent their 
continuance, with power do send for persons and papers, and to report at as early a 
date as possible." 

As is usual in such cases, Mr. Schleicher was appointed chairman of that special 
committee, which gave him, of course, a commanding position in the same. 

On February 9, 1876, the special committee appointed in conformity with the 
resolution approved by the House on January 6, submitted its report,' which con- 
cerned especially the raids on the frontier. 

On the 1st of November, 1877, the House of Eepresentatives passed a resolution, 
introduced by Mr. Schleicher, asking the President to communicate to the House 
any information in his possession relative to the Mexican border in Texas and any 
recent violations of the territory of the United States by incursions by Mexicans, 
and in answer to that resolution President Hayes sent to the House, with his mes- 
sage of November 12, 1877, reports of the Secretaries of State and of War, of the same 
date, Avith their accompanying papers. This message was referred by the House 
to the Committee on Foreign Affairs, and on December 10 of the same year a resolu- 
tion presented by Mr. Schleicher was adopted by the House of Representatives, 
referring to the same committee so much of the annual message of the President of 
the United States to the two Houses of Congress at that session, together with the 
accompanying documents, as related to the difficulties on the Rio Grande border. 

The report of the Committee on Foreign Affairs of the House of Representatives 
of the Forty-filth Congress, second session, presented on April 2-5, 1878, by Mr. 
Schleicher, accompanying a resolution^ which was equivalent to a declaration of 
war against Mexico, was based, among other imaginary insults, on the supposition 
that the Free Zone in Mexico was very injurious to the United States and its estab- 
lishment almost an act of hostility on the part of Mexico. 

Mr. Schleicher died at Washington on January 10, 1879, and this incident ended 
with him, his death having coincided with the consolidation of peace in Mexico. 

Joint resolution of March 1, 1S95. — When some of the most prominent men of the 
United States misunderstood the scope and purpose of the Free Zone, it is not strange 
that some of the inhabitants of the Texas border should have done so also, and 
should, for that reason, have shown a strong dislike and opposition to it. Some 
citizens of Texas living on the frontier, and prejudiced against the Free Zone, pre- 
sented a petition on January 21, 1895, to the Texas legislature, which was afterwards 
approved by that body, in the shape of a resolution calling upon the Members of 
Congress from that State to urge upon Mexico to abolish the Free Zone, and in case 
of a refusal, then for the United States to close its bonded warehouse against all goods 

1 Forty-third Congress, first session. Mouse Ex. Doc. No. 257. 

.2 [Forty -nintli Congress, first session, House of Bepresentatives, Eeport Ko. 2615.] 

JOIXT RESOLUTION". 

Be it resolved iy the Senate and House of Representatives of the United States of America 
in Congress assembled: 1. That experience has fully demonstrated the necessity, iinder 
existing conditions, for the presence of an adequate military force on the Mexican 
border in Texas as the ouly guarantee of the lives and property of our citizens 
against the cattle thieves, robbers, and murderers who cross from the Mexican side 
of the Rio Grande; and that the President is therefore requested to keep on that 
border, from the mouth of the Rio Grande to El Paso, a military force of not less 
than five thousand men, of which at least three thousand shall be cavalry. 

2. That the orders of the President, issued by the Secretary of War June 1, 1877, 
authorizing the crossing of the border by our troops in certain cases, are necessary 
for an efficient defense of the lives and property of our citizens, and should not be 
withdrawn or modified until treaty stipulations shall have been agreed to by Mexico 
that will secure an e(|ually efficient protection. 

3. That the following should be secured by treaty stipulations : 

First. Indemnity for injuries to the persons and losses to the property of citizens 
of the United States for which the Government of Mexico thall be found liable. 

Second. The abolition of the Free Zone. 

Third. Such provisions as will hereafter secure on the border the speedy trial and 
punishment of criminals, residents or citizens of Mexico, as well as others, in the 
courts within whose jurisdiction the crimes have been committed. 

Fourth. The exemption of American citizens residing in Mexico from forced loans 
and all other illegal exactions. 



MEXICAN FREE ZONE. 25 

entering Mexico through any of onr ports. Mr. Jeremiah V. Cockrell, a, Member of 
Congress from the Thirteenth district of Texas, undertook with more zeal than dis- 
cretion to carry out tlie wishes of the Texas legishiture, and on January 17, 1895, he 
introduced a joint resolution ' with a long preamble, asserting that the Free Zone 
was detrimental to the interests of American merchants doing business near the said 
Zone by reason of their inability to compete with the untaxed importations of for- 
eign countries; that it was depriving this Government of much revenue by reason 
of the increasing evil of smuggling on the frontier of the Rio Grande, where an 
increased force of customs inspectors adequate to prevent this contraband trade 
would entail an enormous expense, and that all the free importations landed on the 
Free Zone caused loss of revenue to this Government. 

From what I have already stated from official information obtained from the Sec- 
retary of the Treasury and from the testimonials of gentlemen from Texas holding 
high official positions, who know all about the Free Zone, Mr. Cockrell's assertions 
will be seen to be destitute of foundation. 

Both the preamble and enacting clause were so objectionable to the Committee of 
Ways and Means that, when they reported this resolution'^ to the House on February 

' [Fifty -third Congress, third session (House of Representatives, 260). In the Souse of Representa- 
tives, January 17, 1895. Mr. Cockrell introduced the following joint resolution; which was referred 
to the Committee on Ways and Means and ordered to be printed.] 

JOINT RESOLUTION in reference to the Preo Zone along the northern frontier of Mexico and 
adjacent to tlie United States. 

Whereas the so-called "Free Zone' along the northern frontier of Mexico and 
adjacent to the United States, in which all foreign goods are admitted free of duty 
by the Mexican Government, has had for years past a detrinu'utal effect on the 
interests of American merchants doing business near the said zone, by reason of their 
inability to compete with the untaxed importations from China, Japan, France, 
Italy. German J', and all Europe; and 

Whereas the said Free Zone has for years and is daily depriving the Government 
of much revenue by reason of the increased and growing evil of smuggling on that 
frontier of the Rio Grande, where an increased force of customs inspectors adequate 
to prevent this contraband trade would entail an enormous expense not commensu- 
rate with the revenues there collected ; and 

Whereas all the free importations that are landed on that zone, which cause the 
loss of revenue to this Government and the humiliation of daily violations of its 
customs laws, whicli it is impossible to correct, are carried in bond through this 
country and delivered in said zone:- Therefore, be it 

Resolved by the Stnate and House of Bepresentafires of the United States of America in 
Congress assembled, That the Secretary of the Treasury- be, and is hereby, directed to 
suspend, so long as the Mexican Free Zone law exists, obedience to the laws that 
permit merchandise in bond to be landed thereon, as the only means this Govern- 
ment has to prevent loss of revenue and to protect the honest importers of the United 
States from the unjust discrimination which the Free Zone of Mexico occasions 
against them, without, however, impairing, hindeiing, or impeding the bona fide 
importations into the interior of Mexico beyond the Free Zone frontier, or in any 
manner disturbing the commercial relations of the two countries, excepting so far 
as the Free Zone of Mexico is concerned, which has proven to be inimical to the inter- 
ests of the United States, and after long toleration has justified this course. 

'■' [Fifty-third Congress, third session. House of Representatives. Report No. 1850. Mexican Free 
Zone. February 18, 189o. committed to the Committee of the "Whole House on the state of the 
Union and ordered to be printed.] 

Mr. Bynum, from the Committee on Ways and Means, submitted the following 
report (to accompany H. Res. 277) : 

"The Committee on Ways and Means, to whom was referred the House resolution 
(H. Hes. 260) entitled 'A joint resolution in reference to the Free Zone along the 
northern frontier of Mexico and adjacent to the United States,' having had the same 
under consideration, respectfully report the same back with the recommendation 
that the accompanying substitute be adopted in its stead. 

"The design of the resolution was to prevent the transportation of merchandise 
in bond through the United States into the Free Zone of Mexico. The Free Zone of 
Mexico is a narrow strip extending along the northern boundary of Mexico from the 
Gulf of Mexico to the Pacific Ocean. The Government of Mexico does not allow 
shipments in bond through its territory into the Free Zone, hence all shipments into 
this territory are made through the United States. The sparsely settled country 
along the line between the United States and Mexico makes smuggling easy, and the 
officers of the Government have found it impossible to prevent the same. The 
exemption of that portion of Zona Libre between the Gulf of Mexico and Lareod 
is deemed advisable by reason of the navigability of the river between those points. 
There is no objection upon the part of the Mexican Government to the passage of 
this resolution and the action proposed to be taken by this Government." 



26 JdEXICAN FREE ZONE. 



18, 1895, they had to omit the former and leave of the latter only the provision that 
the Secretary of the Treasury "should suspend the operation of section 3005 of the 
Eevised Statutes in so far as the same permits foreign goods, wares, and merchan- 
dise to be transported in bond through the United States into the Free Zone of Mex- 
ico ao long as the Mexican Free Zone law exists. "i 

In justice to other Members from Texas, I must say that some of them objected to 
Mr. Cockrell's resolution, and Mr. William H. Grain, a young and very promising 
Member from that State, representing the Eleventh district, who, unfortunately, 
has since died, spoke in favor of the Free Zone, showing that it was not prejudicial 
to the United States, and he qualified Mr. Cockrell's resolution as an attempt to 
coerce Mexico into the abolition of the Free Zone. Finally, when he found that he 
could not stem the current, he amended the resolution to the effect that it should 
not embrace his Congressional district, extending from Laredo, Tex., to the Gulf of 
Mexico; and the resolution so amended was approved by the House of Eepresenta- 
tives, reported favorably by the Committee on Finance of the Senate on February 
20, and approved by the Senate on February 25 ; but when the directors of the rail- 
ways running to the excluded district learned of this discrimination they naturally 
objected to it, on the ground that it discriminated against them, and this objection 
was so strong that the resolution had to be reconsidered by the Senate and amended 
to make the prohibition general, and in this form it was finally approved by both 
Houses of Congress and by the President on March 1, 1895.^ 

Commissioner Lyman, of the United States Civil Service Commission, made a trip 
to the frontier, and hearing only parties inimical to the Free Zone, and giving full 
credence to their statements, made a report to the commission on his return to Wash- 
ington in February, 1895, in which he repeated the assertions that the Free Zone was 
prejudicial to the interests of the United States; that it encouraged smuggling, and 
suggested that for the purpose of stopping it, the bonded privilege for foreign mer- 
chandise sent to the frontier should be withdrawn. How ungrounded these views 
were, will appear by reading the opinions of the collector of customs at Laredo, of 
citizens of El Paso, and other prominent parties on the frontier better informed than 
Mr. Lyman of the condition of things there. His opinion, however, could not fail 
to assist the friends of the measure proposed in the House by Mr. Cockrell. 

Mr. Cockrell's resolution, after all his exertions, was inoperative because of its 
imj)erfect wording, to the effect "that the Secretary of the Treasury should suspend 
section 3005 of the Revised Statutes in so far as the same permitted goods, wares, 
and merchandise to be transported through the United States into the Free Zone 
of Mexico so long as the Free-Zone law exists." 

When this resolution went to the Treasury Department, it was found that section 
3005 of the United States Eevised Statutes, which was the only one repealed by the 
same, was insufficient to accomplish the purpose intended by its originators, as it 
ought to have repealed also sections 3002, 3003, and 3004. Section 3005 allowed for- 

1 [Fifty-third. Congress, third session. (H. Res. 277.) In the Senate of the TTnited States. February 
20, 1895, read twice and referred to the Committee on Finance. February 21, 1895. Resolved, That 
this joint resolution pass. February 25, 1895, vote on third reading and passage reconsidered and 
referred to the Committee on Finance.] 

JOIXT RESOLFTION in reference to the Free Zone along the northern frontier of Mexico and 
adjacent to the TTnited States, 

Resolved by the Senate and House of Representatives of the United States of America in 
Congress assembled, That the Secretary of the Treasury be, and is hereby, authorized 
and directed to suspend the operation of section 3005 of the Revised Statutes, in so far 
as the same permits goods, wares, and merchandise to be transported in bond through 
the United States into the Free Zone of Mexico, so long as the Mexican Free-Zone 
law exists, at any point between the western boundary of the city of Laredo, in the 
State of Texas, and the Pacific Ocean: Provided, That nothing herein contained shall 
be construed so as to prevent the transportation of merchandise in bond to be deliv- 
ered at points in the territory of Mexico beyond the limits of said Free Zone. 

Passed the House of Representatives February 19, 1895. 

Attest: James Kerr, Clerh. 

2 [Public Eesolntion, No. 23.] 

JOINT EESOLTJTION in reference to the Free Zone along the northern frontier of Mexico and 

adjacent to the United States. 

Resolved by the Senate and House of Representatives of the United States of America in 
Congress assembled, That the Secretary of the Treasury be, and is hereby, author- 
ized and directed to suspend the operation of section 3005 of the Revised Statutes, 
in so far as the same permits goods, wares, and merchandise to be transported in 
bond through the United States into the Free Zone of Mexico, so long as the Mexi- 
can Free-Zone law exists: Provided, That nothing herein contained shall be con- 
strued so as to prevent the transportation of merchandise in bond to be delivered at 
points in the territory of Mexico beyond the limits of said Free Zone. 

Approved, March 1, 1895. 



1 

at ■! 



MEXICAN PEEE ZONE. 27 

eigu goods to enter in transit in bond directly to tlie place of destination without 
examination, while the others allowed the same goods to enter for warehouse and 
transportation with examination at the port of arrival. As the other three sections 
had been left in force, the only result accomplished by the act was that goods sent 
to the frontier, intended for the Mexican Free Zone, would now be required to be 
examined, when before they could be passed without examination. 

Therefore the efforts of Mr. Cockrell were entirely ineffective ; but even if they 
had been successful, their practical result would have been that European goods 
intended for the Free Zone, which formerly came through the United States, paying 
freight to the American railways, would be imported through Mexican jjorts, and 
from there transported to the Free Zone, to the advantage of the Mexican railways 
and Mexican merchants, and that the American merchants on the frontier who 
formerly handled such goods and gained the commission on the same, would be 
deprived of that business, which would be transferred to the Mexican merchants and 
the right bank of the Rio Grande. 

Prior to the attempt of the United States to put an end to the bonding privilege 
allowing the shipping of goods through the United States, Mexico extended no bonded 
privilege from her ports of entry. This forced all shipments from foreign countries 
to American ports and over American railroads. 

The Mexican entry ports of Tampico, Vera Cruz, and Guaymas did not recognize the 
Zone, and full duties were required on all goods entered, regardless of their ultimate 
destination. The people of the United States, therefore, had up to April 1, 1895, an 
absolute monopoly of the carrying trade of tbe Zone and a monopoly of the selling 
trade of that territory in nearly every line of goods. Such is the result of ill-advised 
legislation. 

The danger that foreign goods transported in bond from or to the frontier and 
passed into Mexico should be smuggled back into the United States could not be 
remedied by that act, because the same danger exists in regard to the same goods, 
once in the Free Zone, whether they come through the United States or through 
Mexican territory, and therefore the measure enacted was entirely inadequate to 
accomplish the object intended. 

These reasons were so plain that on December 18, 1896, Mr. Seth W. Cobb, a Mem- 
ber of Congress from Missouri, introduced, by request, in the House of Representa- 
tives a joint resolution for the repeal of the act of March 1, 1895, which was referred 
to the Committee on Ways and Means of the House. ^ 

If the purpose of that act was to obtain from Mexico a repeal of the Free Zone, 
as might be inferred from its wording, and especially in the form in which it was 
originally submitted, that purpose entirely failed, and I can affirm that this and 
similar measures will be new and serious obstacles for the abolition of the Free Zone. 

An incident happened, in this connection, which I think worth mentioning. In 
the report of the Committee on Ways and Means, submitted to the House of Repre- 
sentatives on February 18, 1895, Mr. Byuum, who had this matter in charge, stated 
that there was no objection on the part of the Mexican Government to the passage 
of that resolution and to the action proposed to be taken by the Government of the 
United States. While this matter was pending in Congress I purposely refrained 
from speaking to any Member on the subject, or taking any action in regard to it, 
notwithstanding that I was sure that Mr. Bynum was misinformed, lest my interfer- 
ence might be considered as an attempt to influence legislation, and because, as we 
have objected to the United States Government interfering in our legi>slation on the 
Free Zone, to be consistent, I thought we ought not to interfere when the United 
States attempted to legislate on the same subject. But after the joint resolution had 
been approved by the President, and it was placed in the statutes of this country, 
1 thought I would make this matter clear, and I wrote to Mr. Bynum the following 
letter : 

Washington, March 6, 1895. 

My Dear Sir : I noticed that you stated, both in the report submitted by yourself 
on the 18th of February ultimo in behalf of the Committee on Ways and Means of 
the House of Representatives, and during the discussion on the subject in the House, 
that there was no objection on the part of the Mexican Government to the passage 
of the resolution to suspend the transportation of our merchandise in bond through 

'[Fifty-fourth Congress, second session (H. Res. 222). In the House of Representatives, December 

18, 1896.] 

Mr. Cobb (by request) introduced the following joint resolution; which was 
referred to the Committee on Ways and Means and ordered to be printed : 

JOINT RESOLUTION to repeal the joint resolution in reference to the Free Zone. 

Resolved by the Senate and House of Representatives of the United States of America 
in Congress assembled, That the joint resolution entitled "Joint resolution in refer- 
ence to the Free Zone along the northern frontier of Mexico and adjacent to the 
United States," approved March 1, 1895, be, and the same is hereby, repealed. 



28 MEXICAN FREE ZONE. 

the United States, destined to the Free Zone in Mexico. As I am not a-ware that my 
Government has made any declaration concerning this matter, you will confer a favor 
on me if you will kindly inform me what was your foundation for this statement. 
Apologizing for the trouble I am giving you, I remain, 
Very faithfully, yours, 

M. Romero. 
Hon. AViLLiAM D. Bynum, 

Indianapolis, Ind. 

In due time I received from Mr. Bynum the following answer: 

Committee on Ways and Means, House of Representatives, 

Waahington, D. C, March 27, 1895. 
My Dear Sir: Yours of the 6th instant addressed to me at Indianapolis was 
returned — hence the delay iu answering. The report upon the bill for abolition of 
the shipment of goods in bond through the United States into the Free Zone of 
Mexico was written very hastily in the closing hours of the session. The statement 
therein that the Government of Mexico had no objections to the measure was based 
upon representations made to the committee by parties who appeared before it in 
advocacy of the passage. It was not based upon anything purporting to come from 
any official or representative of the Mexican Government. 

Very respectfully, W. D. Bynum. 

Mr. M. Romero, WasMngton, D. C. 

Reaction in favor of the Free Zone. — There are some symptoms of reaction against 
■ the hostility of the Free Zone developed in the United States, and I will mention 
here briefly in what they consist. I have already referred to the resolution intro- 
duced by Senator Morgan in the Senate of the United States, asking the Secretary 
of the Treasury for information as to whether and to what extent the Free Zone in 
Mexico encouraged smuggling into this country, and to Secretary Fairchild's answer, 
which showed how insigniticant was the foreign trade through the Free Zone. At 
the same time, on February 16, 1888, Senator Morgan introduced another resolution 
calling on the Secretary of State for "all correspondence with the Government of 
Mexico or its diplomatic representatives respecting the laws and regulations of that 
Republic relating to customs duties and their collection in the belt of border coun- 
try extending along the frontier of the United States from the mouth of the Rio 
Grande to the Pacific Ocean, known as the Free Zone of Mexico. 

This last resolution was intended to bring out my two official communications to 
the Secretary of State, of February 10 and 14, 1888, respectively, which were sent 
to the Senate with the President's Message of March 16, 1888,' and which I append 
to this paper. 

There are also signs of a reaction in Congress on this subject, as is shown by the 
fact already stated that Mr. Seth Cobb introduced a resolution to repeal the joint 
resolution of March 1, 1895; Avhich shows that Members of Congress are becoming 
satisfied of the injurious results to the interests of their own coimtry brought about 
by said joint resolution. 

Notwithstanding the preponderance of opinion against the Free Zone, to which I 
have just alluded, the facts in the case are so plain that it will hardly be possible to 
misrepresent and agitate it much longer. When some of the public men of this 
country took the pains to study the scope and jjurposeof the Free Zone, they at first 

1 [In the Senate of the United States, February 16, 1888. Congressional Record, Vol. XIX, Part II, 

p. 1261.] 

THE MEXICAN FREE ZONE. 

Mr. MoKGAN. I submit the following resolution : 

"Resolved, That the Secretary of State is directed to send to the Senate copies of 
all correspondence with the Government of Mexico, or its diplomatic representatives, 
not heretofore published, respecting the laws and regulations of that Republic relat- 
ing to customs duties and their collection in the belt of border country extending 
with our frontier from the mouth of the Rio Grande to the Pacific Ocean, known as 
the Free Zone of Mexico." 

Mr. Edmunds. I suggest to the Senator from Alabama that the ordinary course 
has been, and I think it ought to be, in calling for diplomatic correspondence that 
the request should be addressed to the President with the usual clause, "If not, in 
his opinion, incompatible with the public interest." 

Mr. Morgan. I had been informed that the minister from Mexico had made a vol- 
untary communication to the Secretary of State setting forth what the laws and 
regulations were. 

Mr Edmunds. I dare say that may be true as a matter of fact, but, officially, we 
do not know it. I think we had better preserve the usual form. 

Mr. Morgan. That was the reason why I put the resolution in the form I did, 
knowing that there was no secret about the matter. I am ciuite willing to change it 



MEXICAN FREE ZONE. 29 

expressed opiuions in regard to that institution "which were greatly at variance with 
those 1 have quoted, but after the question had been discussed it is pleasant to find 
that the false impression that prevailed in the United States regarding the Free 
Zone is being materially changed. 

Mr. Warner P. Sutton, an able consular officer of the United States, who repre- 
sented his country for fifteen years as consul on the frontier, serving for five years 
as consul and ten years as consul-general in Mexico — the first eleven at Matamoras 
and the remainder of the time at New Laredo — holds that the Free Zone in Mexico is 
advantageous, rather than in any way detrimental to the commercial and revenue 
interests of the United States, and he expressed those views in an interview which 
was i^ublished by the New York Eveuiug Post of May 19, 1894. I attach so much 
importance to Mr. Sutton's views tliat I append his interview to this paper. 

As I have already stated, Mr. Grain, a Member of Congress from Texas, delivered 
a speech in the House of Representatives on February 27, 1895, in which he plainly 
demonstrated that the Free Zone in Mexico is in no way prejudicial to the interests 
of the United States; and to the letters addressed to him on February 25, 1895, by 
the collector of customs at Laredo, which express exactly the same views, and on 
January 27, 1895, by the leading citizens of Brownsville, Tex., including the juayor 
and other public men — a city which had been the hotbed of the opposition to the 
Free Zone — asserting that the Free Zone Avas advantageous to the commercial inter- 
ests of the United States. 

The feeling on the frontier of the United States in so far as the Free Zone is con- 
cerned is at present quite different from what it was thirty years ago. Brownsville, 
Rio Grande City, and Nogales have no railroad outlet to the North, and in these 
places few opj)onents of the Zone as an institntion can now be found. The Ameri- 
can opposition to the Zone is to be found in the cities of Laredo, Eagle Pass, and 
El Paso, as it is claimed there that the trade of the American merchants in Eurojiean 
goods, such as silks and other luxuries, is ruined by the proximity of the Free Zone 
and the towns across the riA^er, Nuevo Laredo, opposite Laredo; Piedras Negras, 
opposite Eagle Pass; and El Paso del Norte, opposite El Paso, Tex., are built up at 
the expense of those on the American side. Another class which has opposed the 
Free Zone is a limited number of real estate owners in the border towns of the United 
States, who imagine that if they could ruin their rivals on the other side of the river 
they would enjoy a perpetual boom of prosperity. 

United States opposition to the Free Zone has Ijeen in the way of its abolition. — I think 
it is proper on this occasion to state that the misunderstanding which has prevailed 
here with regard to the object and tendencies of the Free Zone, and the manner in 
which that misunderstanding has been expressed by Federal and State officials, has 
really served as a powerful argument to the Mexican defenders of the Free Zone to 
keep up that institution, as they accuse their opponents of subserviency to this 
country, attributing to them a design to sacrifice the interests of Mexico to the 
demands of the United States. It may not be out of place for me to quote here cer- 
tain views regarding this aspect of the question which I expressed as secretary of 
the treasury of Mexico, in my annual report submitted to the Federal Congress, 
under date of September 16, 1870, and which are the following : 

"The friendly rejjresentations made by the United States Government to that of 
the Republic in relation to the injury accruing to the United States from the Free 
Zone are also worthy of being taken into consideration by Congress, not that it may 
seek to please the neighboring nation in a spirit of servility, at the exjiense of the 
rights and interests of the Republic, which it is under obligations to care for and 
uphold above everything else (which spirit would be unworthy of our national repre- 
sentatives), but as a neighborly act, and in order to have a right to be heard and 
treated with consideration in case that in the process of time some difficulty may arise 

so as to direct the resolution to the President, "If not incompatible with the public 
interest." 

The President pro tempore. The modification of the resolution will be read. 

The Chief Clerk read as follows : 

"Resolved, That the President, if not incompatible with the public interest, is 
requested to send to the Senate copies of all correspondence with the Government of 
Mexico," etc. 

Mr. Edmunds. It should be, "If, in his opinion, not incompatible with the public 
interest." 

The President pro tempore. The resolution as proposed to be modified will be 
read. 

The Chief Clerk read as follows : 

'^Resolved, That the President, if, in his oi^inion, not incompatible with the public 
interest, is requested to send to the Senate copies of all correspondence with the 
Government of Mexico," etc. 

The resolution, as modified, was agreed to. 

The replies to these resolutions are printed, respectively, as Senate Ex. Docs. Nos. 
109 and 130, first session Fiftieth Congress. 



30 MEXICAN FREE ZONE. 

on our northern frontier of such a nature as to possess, regarding Mexico, the charac- 
ter which the Free Zone ^iossesses as regards our neighboring nation ; in order, more- 
over, that Mexico may acquire a new title to be heard and considered in a cordial and 
friendly, as well as just and equitable, manner when she may have occasion to oifer 
remonstrances with a view to the protection of her interests. A nation's dignity is 
not 80 well upheld by refusing to consider the moderate and amicable remonstrances 
of a neighboring nation as it is by hearing and considering such remonstrances, and 
then acting according to the requirements of justice." 

The Free Zone and iJie Hanseatic cities. — The Free Zone question had a precedent in 
the Hanseatic cities of Germany, which it is proper to consider as showing that the 
Free Zone was not a Mexican invention and what may be its probable outcome. The 
Hanseatic cities, especially Hamburg and Bremen, had practically the same thing as 
the Free Zone, and it is perhaps well to compare the situation which existed in these 
Hanseatic cities of Germany with that of the Free Zone in Mexico. The Hanseatic 
cities were, from a customs and financial point of view, treated as a foreign country, 
and all goods, wliether of foreign or of domestic manufacture, had to pay full duties 
upon entering Prussia. 

After the war between France and Germany, Prince Bismarck considered it neces- 
sary that the rich populations of Hamburg and Bremen, consisting of over half a 
million of people, should contribute to the national expenses in revenue, and was 
persistent in that the mentioned cities should abandon their privileges. The Han- 
seatic cities did not talce the initiative step for a customs union with the remaining 
part of Germany, and the people at large were opposed to any change ; but the man- 
ufacturers of Hamburg, who could not ship goods into the remaining part of Ger- 
many without paying duties, had for several years been advocating such a union 
with the other part of the Empire. Prince Bismarck contended that the privileges 
enjoyed by the Hanseatic cities, from a national and financial point of view, were 
a drawback to the interests at large of Germany, as it was very difficult to prevent 
smuggling from the free territory into the territory paying duties, and thus the 
Imperial Government was deprived of a good deal of revenue. 

Finally Prince Bismarck's views prevailed; the desired change was accomplished; 
but when the Hanseatic cities were brought into the customs union there existed 
very little sympathy for the new state of aifairs. However, time has shown that 
the people are now fully satisfied with the existing conditions, and if to-day a move- 
ment should be inaugurated to go back to the old system, it is extremely doubtful if 
a majority could be found in favor of the old conditions. 

Since the formation of this customs union with Prussia, manufacturing, both for 
export and domestic consumption, has increased enormously in the Hanseatic cities, 
a good deal of the manufacturing being done in the bonded warehouse or free dis- 
trict, where everything enters free and there is no interference by the Government. 

The prices of some articles in the Hanseatic cities, of course, increased when they 
had to pay duties, but the increased manufacturing created a demand for labor and 
consequent increase of wages, so that the people were thus fully compensated for 
the increase in the prices of some articles on account of their having to pay duties. 

In the German cities of this union there are certain districts containing from 3 to 
12 square kilometers, where foreign goods are stored or deposited without any cus- 
toms requirements excepting for statistical purposes.^ In Hamburg this free district 

1 Messrs. Ketlesen & Degetau, of El Paso del Norte, Mexico, having asked, on 
February 24, 1897, Messrs. Oetling Gebruder, of Hamburg, several questions about 
the free city of Hamburg, they received the following answer, which shows how the 
Free Zone could be adjusted in Mexico: 

(1) The free territory of the city of Hamburg, before it became included in the 
custom-house union with Prussia, comprised an area of 413.71 square kilometers. 

(2) When leaving the free territory, all merchandise, including agricultural prod- 
ucts, had to pay import duties in conformity with the Prussian tarifl:". 

(3) From the time that Hamburg formed part of the custom-house union with 
Prussia, there was a great improvement noticeable in the State of Hamburg, and all 
its industries greatly increased. 

(4) The prices of the necessaries of life did not increase, as a general rule, as they 
were controlled by the prices ruling in the principal markets of Europe. 

(5) The area of the present jurisdiction granted to bonded warehouses, where 
articles may be kept without paying duties, is 10.44 square kilometers. 

(6) A portion of these warehouses belongs to the Government, and a portion to 
private individiials. 

(7) The Government does not interfere in any way with any merchandise entered 
at the free warehouse. 

(8) Duties in conformity with the tariff have to be paid on all articles taken from 
the bonded warehouse for home consumption in Germany. No duties have to be 
paid on any articles taken out to be exported. 

Oetling Gebruder. 
Hamburg, March 20, 1897. 



MEXICAN FREE ZONE. 31 

or territory contains 12 square kilometers, and while Hamburg, before entering the 
customs union with Germany, was the fifth most important port of the world, it has 
since then become one among the first in importance. 

This may be the way to solve the problem in Mexico; that is, the Government 
might designate a certain territory, say, two or three square kilometers, for instance, 
in Matamoras, Laredo, Piedras Negras, El Paso del Norte, and Nogales, where mer- 
chants w^ould be allowed to store their goods without duties, and then, upon their 
withdrawing the same for home eousumption, pay full duties; and if they should 
be exported, to be free of any expense for duties. This would give the frontier 
towns an opportunity to develop a large trade in commerce, and even sell to parties 
in the United States. 

Conclusion. — I sincerely hope that the foregoing remarks will in some measure con- 
tribute to dispel the false impressions prevailing in the United States in regard to 
the Mexican Free Zone, and that in consequence, when the agitation on the subject 
shall have completely disappeared, it will be easier to adjust this matter in such a 
manner as will be honorable and satisfactory to all concerned. 

M. Romero. 

Washington, Decemier, SI, 1897. 



Appendix to the Mexican Free Zone. 

[President's message of Marcli 16, 1888, on the Free Zone. Senate, Fiftieth Congress, first session 
Ex. Doc. No. 130. Message from the President of the United States, tiansmitting a letter of the 
Secretary of State in response to Senate resolution of February 16, 1888, relative to the Mexican 
Zona Libre. March 19, 1888, read and referred to the Committee on Printing; March 27, 1888, 
ordered to be printed.] 

To the Senate of the United States : 

I herewith transmit, in compliance with the resolution of the Senate of the 16tli 
ultimo, a report from the Secretary of State, accompanied by certain correspondence 
in regard to the Mexican Zona Libre. 

Grover Cleveland. 
Executive Mansion, 

Washington, March 16, 1888. 



The President : 

The undersigned. Secretary of State, to whom was referred a resolution adopted 
by the Senate of the United States on the 16th ultimo, requesting the President, " if 
in his opinion not incompatible with the public interest, to send to the Senate copies 
of all correspondence with the Government of Mexico, or its diplomatic representa- 
tives, not heretofore published, respecting the laws and regulations of that Repub- 
lic in its belt of border country extending with our frontier from the mouth of the 
Rio Grande to the Pacific Ocean, known as the Free Zone of Mexico," has the honor 
to submit to the President, with a view to its communication to the Senate in 
response to that resolution, copies of certain unpublished correspondence on file in 
the Department of State which cover the inquiry of that body. 

A copy of the important tariff laws and customs regulations of Mexico, which. 
went into effect July 1, 1887, and which include many special provisions relative to 
importation, bonding, consumption, and travel in the Zona Libre, is also transmitted 
as essential to a knowledge of its workings. 

Two of the inclosures,! with the note of the Mexican minister at this capital, 
dated February 10, 1888, on the subject of the Zona Libre from a historical view, are 
unavoidably communicated in the original Spanish. 

Respectfully submitted. 

T. F. Bayard. 

Department of State, Washington, March 16, 1888. 

List of accompaniments. 

1. Mr. Frelinghuysen to Mr. Morgan, No. 552, April 25, 1884, with inclosures. 

Messrs. Coke and Lanham, April 17, 1884, with petition of citizens of Texas. 

2. Mr. Romero to Mr. Frelinghuysen, May 5, 1884, with inclosure, being a law of 
Mexico issued March 25, 1884, instituting the Zona Libre. 

3. Mr. Frelinghuysen to Mr. Morgan, No. 575, May 20, 1884, with inclosuros. 

(1) Mr. Lanham to Mr. Frelinghuysen, May 1, 1884. 

(2) Mr. Morehead to Mr. Lanham, April 24, 1894. 

1 While this document was passing through the press an opportunity was found to 
translate these inclosures, and they therefore appear translated into the English 
language. 



32 MEXICAN FREE ZONE. 

4. Mr. Romero to Mr. Bayard, June 12, 1885. 

5. Mr. Romero to Mr. Bayard, January 4, 1886, with incloBure, being reports of the 
secretary of the treasury to the Mexican Congress. 

6. Mr.' Sutton to Mr. Porter (extract), No. 408, May 25, 1887, with inclosure, being 
the tariff laws of Mexico which went into operation July 1, 1887. 

7. Mr. Romero to Mr. Bayard, February 10, 1888, with inclosures. 

(1) Decree establishing the Zona Libre. 

(2) Circular to frontier custom-houses. 

(3) To custom-house at Matamoras. 

(4) Circular to custom-houses. 

8. Mr. Romero to Mr. Bayard, February 14, 1888. 



No. 7. — Mr. Eomero to Mr. Bayard. 
[TraiislatioD.] 

Legation of Mexico, 
Washington, February 10, 1888. 

Mr. Secuetary : I have observed both in the correspondence of the representa- 
tives of the United States in Mexico, which has been published by their Government, 
and in statements made by prominent persons in this country, expressions and opin- 
ions respecting the Free Zone which exists in the portion of Mexico bordering on the 
United States which I consider wholly unfounded. It has consequently seemed 
proper to me, from a due regard to the good understanding and harmony between 
our two countries, to offer some explanations whereby I trust that the erroneous 
impressions that now prevail on this subject will be rectified. 

I think I do not hazard much in saying that both in official circles in the United 
States and outside of those circles it is Ijelieved that the Free Zone was established 
in Mexico as an act of antagonism, if not of hostility, to the United States, and 
mainly, if not solely, for the purpose of encouraging smuggling, to the prejudice of 
the fiscal interest of this country. It will not be difficult to show how unfounded 
these opinions are. 

When in pursuance of the treaty of February 2, 1848, the Rio Grande from El 
Paso del Norte to the point where it floAvs into the sea was accepted as the boundary 
line between Mexico and the United States, and when American settlements began 
to be made on the left bank of that river, two peoples were brought into contact with 
each other whose economical and commercial conditions offered a striking contrast. 
In the United States no taxes were levied upon internal trade, and it was not other- 
wise restricted; the import duties on foreign goods were at that time relatively low, 
and the country was just entering upon an unexampled career of progress, while in 
Mexico, which had inherited the Spanish system of taxation, taxes were levied which 
largely increased the cost of domestic goods. The collection of these taxes rendered 
internal custom-houses necessary, and the restrictions placed upon trade were number- 
less; import duties on foreign goods were so high as to be prohibitory ; in addition to 
this, the importation of various kinds of goods was prohibited, among them some of 
prime necessity, such as provisions. 

The result of this state of things was that while in Brownsville, and other towns 
on the left bank of the Rio Grande, domestic articles of daily use, such as provisions, 
clothing, etc., were sold at a comparatively low price, in the Mexican towns on the 
right bank they cost twice and even four times as much, and that foreign goods also 
were much cheaper on the one than on the other side of the river. 

This difference of circumstances necessarily brought about one of these two results : 
It either caused the inhabitants of the Mexican towns to emigrate to those of the 
United States in order to enjoy the advantages which were to be had in that country, 
or it induced them to purchase the goods which they needed in the United States and 
then to smuggle them over to the Mexican side. 

In 1849, that is to say, in the year following that in which the new boundary line 
was adopted, the situation on the Mexican frontier became so disquieting that the 
Federal Congress was obliged to pass a law, on the 14th of April, which may be con- 
sidered as the first step toward the establishment of the Free Zone. This law author- 
ized, for a term of three years, the importation through the frontier custom-houses 
of the State of Tamaulipas of such provisions as were for the use of the people of the 
frontier, which goods, up to that time, had been prohibited by the existing tariff or 
had been subject to very heavy duties. 

This law did not meet the exigencies of the situation, and in 1858 the Free Zone 
was established by the governor of Tamaulipas as an absolute necessity of the State. 

On the 5th of February, 1857, the constitution was adopted which is now in force 
in Mexico, and which went into operation on the 16th of September following. On 



MEXICAN FREE ZONE. 33 

the 1st of September, Don Ignacio Comonfort, the coustitutioual President, was 
inaugurated, and, unfortunately, a pronuncianiiento was issued by liim on the 17th 
of the same month against the constitution ; he also dissolved the Federal Congress 
which was then iu session. For this reason several Mexican States, especially such 
as were at a distance from the center, reassuraed their sovereigntj^, and their legis- 
latures granted extraordinary powers to the governors in order to enable those 
officers to protect their institutions. 

In virtue of these povvers the governor of the State of Tamaulipas Issued, on the 
17th of March, 1858, a decree which was designed to afford a remedy for the hard- 
ships that were then suffered by the frontier population of that State. This decree 
established what has since that time been known as the '^ Free Zone," in which for- 
eign goods intended for the use of the frontier towns of the State, and of the ranches 
in their jurisdiction, or for trade between those towns, were to be exempt from all 
Federal duties, but not from municipal or State taxes, an unlimited right of bond- 
ing being, moreover, granted to those towns. Thus it was that foreign goods 
imported there could remain stored indefinitely without paying any duties to the 
Federal treasury. The said goods paid no import duties, except when they were 
removed from those towos to be shipped to the interior of Mexico. 

Nothing could furnish a better explanation of the true object of the decree issiied 
by the Governor of Tamaulipas, if there were room for any well-founded doubt 
with regard to it, than the grounds on which he based his action, which were as 
follows : 

"Whereas the towns on our northern frontier are in a state of actual decadence 
owing to the want of laws to protect their trade; and whereas, being situated in 
close proximity to a commercial nation which enjoys free trade, they need similar 
advantages in order to avoid losing their population, which is constantly emigrating 
to the neighboring country; now, therefore, desiring to arrest this serious evil by 
means of franchises which have so long been demanded by the frontier trade." 

•» if # * * 7f ir 

The decree of the governor of Tamaulipas of March 17, 1858, was submitted to the 
legislature of the State and also to the Federal Congress for their approval, and it 
was approved by the latter body July 30, 1861. 

This brief statement will, I think, be sufficient to show that the establishment of 
the Free Zone was a step taken in fulfillment of the duty of self-preservation, so to 
speak, and that it was by no means a measure adopted in a spirit of unfriendliness,' 
much less of hostility toward the United States, as has been believed in this country. 

The second impression Avhich prevails here with regard to the Free Zone is equally 
unfounded. 

The events connected with the foreign intervention did not permit the effects of 
the Free Zone to be felt in Mexico until the Eepublic returned to its normal condi- 
tion, as it did when peace was restored. 

In the report made by the Secretary of the Treasury to the Congress of the United 
States September 16, 1869, that officer stated that one of the causes of the then 
depleted condition of the Mexican treasury was the large contraband trade that was 
carried on through the Free Zone enjoyed by the frontier towns of Tamaulipas. The 
Secretary remarked at the same time that the custom-houses of those towns were 
scarcely able to meet their expenses, which showed that that region had not pros- 
pered, notwithstanding the franchises granted to it by the Free Zone, and that the 
said Zone was not the proper remedy for the evil which it was intended to cure. 

It is true that the privilege granted by the Free Zone to the inhabitants of the 
northern ])ortion of Tamaulipas to import foreign goods withoutpaying import duties, 
to store them in their own houses, and to keep them in bond for an unlimited time 
was, and has been, a powerful incentive to smuggling, with a view to repressing 
which recourse has been had in Mexico to n costly and comjilicated system of inspec- 
tion. Protection to smuggling was not, however, the object had in view by the 
creators of the Free Zone, nor has it been possible for smuggling to be carried on to 
the prejudice of the United States to the same extent to which this has been done 
to the prejudice of Mexico. 

Inasmuch as the duties levied by the Mexican tariff" are much higher than those of 
the United States, it is evident that the most lucrative contraband trade is that 
which is carried on to the detriment of the Mexican treasury. That trade is, at the 
same time, carried on with less difficulty, because the Mexican frontier is very 
sparsely populated, in consequence of which the difficulty of guarding it is greatly 
increased, while the frontier of the United States is more thickly settled and better 
defended against smuggling. 

It does not seem to me conceivable that, in order to encourage smuggling, to the 
detriment of the United States Treasury, which might be counted as one, smuggling 
could be encouraged to the detriment of the Mexican treasury, which might be 
counted as ten [i. e., in order to injure the United States the Mexicans would not be 
willing to injure themselves ten times as much] ; and if the smuggling which is 

H. Eep. 702 3 



34 MEXICAN FREE ZONE. 

carried on tlirongh the Free Zone were a sufficient reason for the abolition of the 
latter, the interest of Mexico in this matter would long since have settled this 
question. 

There is another consideration to which I think proper to call your attention before 
conclu(iino- this note, and which, in my judgment, may be regarded as an advantage 
to the United States accruing from the Free Zone. As I have already stated, the 
Mexican system of legislation concerning customs and excise duties has generally 
been restrictive and even prohibitory, both by reason of the high import duties 
established in my country and of the existence of interior custom-houses ; also on 
account of State and municipal taxes, which necessitate vigilance and restrictions 
that can not do otherwise than hamper business transactions. I have frequently 
seen complaints on this account in official documents of this Government, and I con- 
fess that some of them have appeared to me to be not withoiit foundation, although 
we are the party that suffers most from those restrictions. 

If the Free Zone in Mexico has inconveniences for this country much less serious 
than those which it has for Mexico, it has, in my judgment, one advantage which 
has hitherto remained unnoticed. That advantage is that goods from the United 
States may be imported into Mexican territory duty free and be warehoused in the 
region of the Zone for an unlimited time. No greater privileges to the commerce of 
a nation can be asked for. If these privileges, which are confined to a limited zone, 
were extended to the whole country, I do not think that the United States would 
consider the free admission of their productions into Mexico as being prejudicial to 
their interests. 

As I have already remarked, the opinions of Mexican statesmen with regard to the 
Free Zone have been divided, some having thought that it should be abolished, 
because it grants to one section of the country privileges which are not authorized 
by the constitution, and others having maintained that, under the circumstances, it 
was an imperative necessity, and that its abolition would be equivalent to the 
destruction of the frontier. The latter opinion iinally prevailed in the councils 
of the Mexican Government, and, in accordance therewith, the Free Zone was 
extended to the States of Coahuila, Chihuahua, Sonora, and the Territory of Lower 
California, for a distance of 20 kilometers from the boundary line; and thus, so far 
from any encouragement being afforded to those who favored the abolitiori of the 
Free Zone, the opposite system triumphed completely. 

The Free Zone was subjected to regulations^ or rather it was confirmed and ampli- 
fied, by another decree of the governor of Tamaulipas, bearing date of October 29, 
1860, and the Federal Government did not subject it to regulations until June 17, 
1878. Chapter XII of the tariif of January 24, 1885, subjected the Free Zone to regu- 
lations in a restrictive way. Such, however, was the pressure exerted by the frontier 
towns and by their representatives in the Congress of the Union that, by a decree 
dated June 19, 1885, the limitations established in that chapter were suspended and 
more liberal regulations were again adopted in the tariff of March 1, 1887, which is 
still in force. 

I think it proper for me to state in this connection that when I was obliged to 
study this question thoroughly, owing to the fact of my filling the office of the sec- 
retary of the treasury of the United States of Mexico, I formed an opinion which 
was decidedly adverse to the Free Zone, which opinion I expressed in official docu- 
ments, and recommended its abolition to Congress ; so that instead of having been an 
advocate of the Zone I have probably been its most earnest opponent. The reasons 
which led me to this conclusion were of a constitutional character, and although I 
was aware that the situation of the frontier towns of Mexico required the adoption 
of suitable remedies, I always exerted myself to have measures adopted of such a 
nature that they could be extended to the whole country, they thereby being divested 
of their odiousuess as privileges. 

There can be no doubt as to the right of the Government of Mexico to establish 
rules relative to domestic and foreign trade in the country, and the misunderstanding 
which has prevailed here with regard to the object and tendencies of the Free Zone, 
and the manner in which that misunderstanding has been expressed by certain Federal 
and State officers, has really served as an argument to the advocates of the Free Zone, 
who attribute to their opponents a design in advocating its abolition to sacrifice the 
interests of Mexico to satisfy the demands of the United States. 

It may not be out of place for me to quote here certain views that were expressed 
by the secretary of the treasury of Mexico in the report submitted by him to the 
Congress of the Union under date of September 16, 1870. They are as follows : 

"3679. The friendly representations made by the United States Government to 
that of the Republic in relation to the injury accruing to the United States from the 
Free Zone are also worthy of being taken into consideration by the Congress, not 
that it may seek to please the neighboring nation in a spirit of servility at the 
expense of the rights and interests of the Republic, which it is under obligations to 
care for and uphold above everything else (which spirit would be unworthy of our 



MEXICAN FREE ZONE. 35 

national representatives), but as a neighborlj' act, and in order to have a right to be 
heard and treated with consideration in case that in process of time some diiMculty 
arise on our northern frontier of such a nature as to possess, as regards Mexico, the 
character which the Free Zone possesses as regards our neighboring nation; in 
order, moreover, that Mexico may acquire a new title to be heard and considered in 
a cordial and friendly as well as just and equitable manner when she may have 
occasion to offer remonstrances with a view to the protection of her interests. 

"A nation's dignity is not so well upheld by refusing to consider the moderate and 
amicable remonstrances of a neighboring nation as it is by hearing and considering 
such remonstrances and then acting according to the requirements of justice." 

As a supplement to this note I have the honor to inclose a pamphlet containing the 
following documents : 

(1) Text of the decree of the governor of Tamaulipas, dated March 17, 1858, estab- 
lishing the Free Zone. 

(2) A law passed by the Federal Congress of Mexico, dated July 30, 1861, confirm- 
ing the above decree. 

(3) Regulations concerning the Free Zone, promulgated by the governor of 
Tamaulipas October 29, 1860. 

(4) The first regulations concerning the aforesaid Zone, promulgated by the Fed- 
eral Government July 17, 1878. 

Kuller details on this subject will be found in the speeches delivered bj^the secre- 
tary of the treasury in the Mexican Congress on the 28th and 29th of October, and 
on tlie 4th and 5th of November, 1870, which are contained in the "verbal reports of 
the secretary of the treasury to the Congress of the Union during the first period of 
the second year of its sessions," printed in the City of Mexico in 1870, a copy of 
which I sent to you as an inclosure to my note of January 4, 1886. 

Be pleased to accept, Mr. Secretary, the assurances of my most distinguished 
consideration. 

M. Romero. 

Hon. Thomas F. Bayard. 



No. 8. — Mr. Eomero to Mr. Bayard. 

Legation of Mexico, 
Washington. February 14, 18S8. 

Mr. Secrktary: In the note which I addressed to you on the 10th instant relative 
to the Free Zone established in Mexico I omitted to state two facts which I think 
proper to mention here with a view to throwing additional light upon this matter 
and to dispelling certain prejudices which prevail in this country with regard to it, 
and which might affect the friendly relations between Mexico and the United States. 

The first of these facts is that the Free Zone was not really an invention of the 
Mexican authorities of the State of Tamaulipas, but an imitation on a larger scale 
of similar measures which had been adopted more than five years previously by the 
United States Government for the benefit of that portion of its territory which bor- 
dered on Mexico. 

The law of the United States Congress of August 30, 1852, authorized the trans- 
portation to Mexico of goods sent in bond by certain routes siiecified in that law, and 
by all such others as the Secretary of the Treasury might see fit to authorize. This 
rendered it possible to send large quantities of goods to the frontier towns of the 
United States witiiout paying duties and to keep them there in bond until a favoral)le 
opportunity offered for their exportation to Mexico. 

As everything may be abused, the goods that were stored in the frontier towns of 
the United States were smuggled into Mexico. The United States Congress, when it 
passed that law, of course did not intend to encourage smuggling to the detriment of 
Mexico, although such was, practically, its result ; just as the governor of Tamaulipas 
at first, and the Mexican Congress afterwards, did not intend, in establishing the Free 
Zone, to facilitate smuggling to the detriment of the United States. 

There was no such privilege within the territory of Mexico. All foreign goods, 
of whatever kind they might be, were subjected to the payment of duty when they 
were imported. 

This difterence of circumstances led the public men of Tamaulipas to believe that 
in order to place both sides of the frontier on the same footing in respect to commer- 
cial privileges they needed to establish privileges similar to those which existed in 
the United States, although those Avhich they did estaldish by the decree of March 
17, 1858, were much more extensive than those which existed on the left bank of the 
Rio Grande. 

The second fact which I desire to mention is a coincidence which is one of the 
causes that haA'e induced the inhabitants of the Mexican frontier to attribute to the 



36 MEXICAN FREE ZONE. 

Free Zone more beneficial results tbau it has really produced, which circumstance 
has, perhaps, led to its maintenance and extension. 

The situation of the Mexican frontier up to the beginning of the civil war in the 
United States was, as I have already remarked, one of poverty and even of misery, 
and formed a striking contrast to the other side of the Eio Grande. That war broke 
out almost simultaneously with the establishment of the Free Zone. The situation 
of the Mexican frontier thereupon chauged very much, and welfare and prosperity 
crossed from the left to the right bank of the Rio Grande during that war and for 
some time afterwards, owing to the general prostration which prevailed in the South. 
Superficial observers attributed that prosperity not to its true cause, which, in my 
opinion, was the aforesaid war, but to the Free Zone, and feeling convinced that it 
had been productive of extraordinary results, they naturally considered it as a pan- 
acea for all evils and its extension as an imperative necessity for the country. 

I hope that these brief explanations will serve to rectify some of the errors and 
prejudices which prevail in tlais country in reference to this matter. 
Be pleased to accept, etc., 

M. Romero. 



Mr. Crain's speech in the House of Representatives. 

[Coiiaressional Record, Vol. XXVII, Xo. 65, Fifty-third Congress, third session, Wa.shiDgton, "Wednes- 

daj-, Fehruary 27, 18'J5.] 

House of Reprksentatives, 

Wednesday, Fehruary 27, 1895. 
The House met at 11 o'clock a. m. Prayer by the chaplain. Rev. E. B. Bagby. 
The Journal of the proceedings of yesterday was read and approA^ed. 

MEXICAN FREE ZONE. 

The Speaker also laid before the House the amendments of the Senate to the joint 
resolution (H. Res. 277) in reference to the Free Zone along the northern frontier of 
Mexico and adjacent to the United States. 

Mr. CoCKRELL. I move to concur in the Senate amendment. 

Mr. Chain. Would it be in order to move to refer this matter to a committee? 

The Speaker. It would. 

Mr. Chain. I move its reference to the Commifctee on Ways and Means. 

The Speaker. The amendment of the Senate will be read. 

The Clerk read as follows : 

"Strike out, after the word 'exists,' in line 8, the following words: 'At any point 
between the western boundary of the city of Laredo, in the State of Texas, and the 
Pacific Ocean.'" 

The Speaker. The motion to refer will first be submitted to the House. 

The question was taken, and on a division (demanded by Mr. Grain) there were — 
ayes, 7; noes, 43. 

Mr. Grain. No quorum. 

The Speaker. The point of order being made that no quorum has voted, the Chair 
will ajjpoint tellers. 

Mr. Grain and Mr. Cockrell were appointed tellers. 

Before the announcement of the result of the division 

Mr. Chain said : Mr. Speaker, I withdraw the point of no quorum, with the under- 
standing that I am to have time to explain my position in reference to this matter. 

The Speaker. The point of no quorum is withdrawn.' The noes have it and the 
motion to refer is lost. 

The question now recurs on the motion to concur in the Senate amendment. 

Mr. Cabaniss. I would ask that this amendment be again reported. 

The amendment was again read. 

Mr. Chain. Mr. Speaker 

The Speaker. The Chair recognizes the gentleman from Texas [Jlr. Cockrell] in 
charge of the resolution. 

Mr. Cockrell. I yield to my colleague thirty minutes. 

Mr. Grain. Mr. Speaker, the history of this resolution is a very peculiar one. 
Originally, without the amendment proposed by the Senate, it was an agreed settle- 
ment of all of the differences between my colleague from Texas and myself upon the 
subject of the disestablishment of the Free Zone by the coercion of a neighboring 
Government on the part of the Congress of the United States. The amended reso- 
lution of the House was agreed to by my colleague [Mr. Cockrell], my colleague 
[Mr. Paschal], and myself, and was adopted unanimously, I believe, by the Commit- 



MEXICAN FREE ZONE. 37 

tee on Ways and Means of the House. The House passed it by unanimous consent, 
and it was passed in the Senate -without objection, and was signed \>y the Speaker of 
the House and by the President of the Senate, and would doubtless to-day be the 
law of the land but for the fact that Washington's birthday intervened, and the 
resolution, as thus signed, failed to reach the hands of the President. 

The resolution as amended was recalled by the Senate without objection, and an 
amendment inserted by that body providing that the coercive measure suggested in 
the resolution should apply to the entire boundary between the Republic of Mexico 
and the Republic of the United States. I have no objection to the gentlemen who 
represent other portions of the Rio Grande having their wishes carried out in that 
regard, but I do protest in the name of the constituency I have the honor to repre- 
sent against the imposition of a coercive measure like this upon their neighbors on 
the other side of the Rio Grande. 

I can not understand, Mr. Speaker, how Democrats who are theoretically and Avho 
are assumed to be practically free traders can favor a measure which has for its ulti- 
mate effect, as stated in the body of it, the coercion of a sister republic into the dis- 
establishment of free trade and the establishment in lieu thereof of a protective-tariff 
system. I can readily understand how logically and consistently our Repiiblican 
brethren can support such a proposition, but I fail to understand how gentlemen 
claiming to be Democrats and who are willing to put wool upon the free list, and sugar 
upon the free list, and iron upon the free list, and other raw materials upon the free 
list, can support a measure which declares to the Mexican Government that it must 
discontinue free trade along our frontier and substitute in place of it a protective- 
tariff system. 

The Mexican Free Zone includes a strip of territory varying in width from three 
to twelve or thirteen miles. In that territory all goods coming from any country in 
the world, whether from Japan, China, or the United States, are entered by the pay- 
ment of one-tenth of the regular Mexican tariff rate. After those goods leave that 
zone they are compelled by each municipality, by each State, and by the Federal 
Government through whose territory they pass to pay the regular tariff' rate imposed. 

Now, Mexican wool comes into Texas free. Why ? Because we have established a 
Zona Libre, not 3 miles in extent, but coextensive with the limits of the United 
States, because we have made wool free. I say to this House, Mr. Speaker, that by 
the adoption of this resolution we aff^^ct not the people of Mexico alone, not those 
who are charged with being smugglers, but foreign governments, whose importers 
have the advantage of the bonded system and also every mode of transportation of 
foreign goods in bond across the territory of the United States intended for con- 
sumption in the Republic of Mexico. 

The opposition to the proposition as agreed upon and unanimously passed by this 
House, which opposition was raised in the Senate, was not based upon any political 
or economical ground, but upon the pretext that the carrying trade of all these goods 
in bond would enter Mexico by one railroad, the Mexican National, or by the Inter- 
national and Great Northern, and would be taken away from the Southern Pacific, 
the Texas Pacific, and other roads running into and through the territory represented 
by my colleagues who favor this resolution. 

It is an injustice to foreign Governments. Why? Because the subjects of these 
Governments who are manufacturers, who are producers, are prohibited from carry- 
ing their goods in bond across the territory of the United States into the Republic of 
Mexico. Gentlemen in the other Chamber of this legislative body have said, "We 
are Americans ; we do not intend to be compelled by Germany or by France to remove 
the differential tax on sugar, when they seek to comjiel us to do it by retaliation by 
refusing importations of American breadstuffs, American beef, or American meat 
products of any kind, character, or description." And yet we propose by this reso- 
lution to say to Mexico, "Until you abolish the Free Zone you shall not have the 
privilege of the bonded system across our country." Will any gentleman arise now — 
and I pause for a reply — and give any sound, truthful reason for this proposition? 
Nobody suggests a reason. 

It is said tliat the Mexican Government wants this Free Zone disestablished. It 
is within their own province. It is within their own territorial jurisdiction, and if 
they desire to have it abolished, why does not the Mexican Congress, acting with 
the Mexican President, abolish it? Is it possible that in order to accomplish this 
result they appeal to the American Congress? We might as well say that until 
Great Britain does away with comparative free trade we will keep up our high 
protective-tariff system. We repel the idea of coercion on the part of European 
Governments, and yet we attempt to establish a similar policy by our legislative 
enactment. 

Only 12 per cent of the entire importations into Mexico remain in the Free Zone. 
It has been said that it is a hiding place, a nesting place for smugglers. Mr. Speaker, 
I have in my possession a letter from the collector of customs at Laredo, which is an 
answer to this base, calumniatory charge against my constituents. I do not stand 



38 MEXICAN FREE ZONE. 

here to speak for others. If colleagues of mine say that their constituents are smug- 
glers, I do not attempt to dispute the suggestion, for 1 have no knowledge on the 
subject; hut as to my own constituents, I do repel the insinuation, or the charge, in 
whatever form made or wheucesoever it comes, with all the power of language I can 
command. 

I ask, Mr. Speaker, that the Clerk of the House read this communication. 

The Speaker. The Clerk will read. 

The Clerk read as follows : 

CusTOM-HousB, Collector's Office, 

Laredo, Tex., February 23, 1895. 

My Dear Sir: I am just in receipt of the marked copy of the Washington Post 
of the 12th instant, sent me by you, containing an extract from the report of Civil 
Service Commissioner Lyman on his recent tour of inspection along the Mexican 
frontier. With the greater part of the conclusions reached by Commissioner Lyman 
I very heartily agree, but I am unable to see what benefit will accrue to the United 
States from the abolition of the Free Zone. It is true that petty smuggling is con- 
stantly carried on between the towns in the Free Zone just across the river and those 
on this bank. This petty smuggling is annoying, and it is almost impossible to pre- 
vent it. The purchases of foreign goods in Nuevo Laredo, for instance, made by 
persons from this side, are usually small in quantity and value. I think that in most 
cases the petty smuggling of this character is done by ladies who conceal about 
their persons a few pairs of silk hose or kid gloves, small quantities of lace, and, in 
some instances, silk dress patterns. As the majority of the people here, howeA^er, do 
not indulge in silk goods of any character, these purchases are not extensive. On the 
other hand, the people who live across the river buy very largely on this side, their 
purchases consisting of groceries, prints, hardware, and articles of like character. 

One gentleman who lives in Nuevo Laredo told me yesterday that his monthly bills 
on this side of the river amounted to $60. Numbers of families living in Nuevo 
Laredo buy practically all of their groceries from merchants on this side of the river. 
The commission merchants here tell me that they have in the Free Zone one of their 
best markets. Flour, bacon, and many other American products are sold in Nuevo 
Laredo and the territory above and below that point. In fact, the balance of trade 
is very largely in our favor. I can not assent to the proposition that the existence 
of the Free Zone has inured very largely to the beneiit of the Mexican border towns, 
and that business is "dead and unprofitable" in the American towns opposite them. 
This is not true of Laredo. This place has been steadily growing in importance as 
a business point for the past several years. Our merchants have been doing a large 
and profitable business, and all of them are prosperous. 

During the long period of depression that has prevailed everywhere we have not 
had a single failure among our business men. There is not a single storehouse on 
this side of the river that is unoccupied. There are numbers of vacant houses in 
Nuevo Laredo, across the river, and they have only two general dealers whose busi- 
ness is of any importance. On the Mexican side of the river the towns of Guerrero, 
Mier, Camargo, and Matamoras, all in the Free Zone, are dead towns. Guerrero was 
formerly a fine little city of about 6,000 population and with a thriving trade. I 
visited it some two months ago, and found it a "deserted village" of about 800 peo- 
ple. Its storehouses are closed and its trade is dead. I learn that this is true in a 
large measure of the other towns named. 

If the proposition now before Congress to withdraw from the Mexican merchants 
the privilege of transporting goods in bond across our territory becomes a law, it will 
divert from our American railroads a large part of the freight traffic now enjoyed by 
them and will send it permanently to the Mexican ports of Tampico and Veracruz. 
Should it be enacted and the result be the abolition of the Free Zone, what benefit 
will the United States derive? I can think of none. Those of our jieople who 
understand this matter are obliged to you for your amendment excepting our terri- 
tory from the operation of this law. I inclose a note from Special Inspector Izard 
on this subject, and a letter recently published by Mr. Shaffer, of Eagle Pass. 
Yours, very truly, 

Frank B. Earnest. 

Hon. W. H. Craix, WasMngton, D. G. 

Mr. Grain. Now, Mr. Speaker, I should like to have an editorial read from the 
Lower Rio Grande, a paper which is published at Brownsville, Tex. 
The Clerk read as follows : 

"the zona LIBRE. 

"On the 24th instant we published a resolution to be presented to the Texas 
legislature, which has since passed that body, and which calls upon our Members of 
Congress to urge upon Mexico to abolish the Mexican Zona Libre, or Free Zone, and 
in case of a refusal, then for the United States to close its bonded warehouses 
against all goods entering Mexico through any of our ports. 

"We have been at a loss to understand how or why such a ruinous measure could 



MEXICAN FREE ZONE. 39 

ever be proijosed and why or how it could pass the Texas legislature, aud, astonish- 
ing to relate, we are told that it was not opposed by our immediate representatives 
even; and such a mass of absolute misstatements is permitted to be sent as a basis 
for future Congressional legislation. 

"Apropos of this resolution we have been shown a pamphlet written by Mr. C. R. 
Morehead, president State National Bank, El Paso, Tex., which is possibly the basis 
of the resolution passed by the Texas legislature, which is a statement against the 
Free Zone, urging its abolishment. Were Mr. Morehead a citizen of the interior of 
Mexico, or a European manufacturer, there might be some reason to justify his 
statements, but as an American a more suicidal effort was never made. The open- 
ing of his pamphlet is as follows : 

'"Along the Rio Grande River, the divide between the territory of the United 
States and that of Mexico, are many causes which result in an ill-feeling between the 
border inhabitants which is daily growing in intensity and magnitude. These causes 
and the consequent estrangement are the growth of many years, and have a tendency 
to result in a complete alienation. 

" 'This immediate section, having once formed a portion of the dominion of Mexico, 
and having gained its independence by the sword, is uaturallj' antagonized by that 
Government, and to such an extent that forbearance almost ceases to be a virtue. 

" ' The conditions which cause the intensity of feeling are mainly the result of long 
years of Mexican legislation which has operated against the commercial interests of 
the entire border. This legislation was hrst conceived on March 17, 1858, when the 
governor of the State of Tamaulipas, Mexico, issued a decree establishing what is 
known as the Zona Libre, or Free Zone, along the northern boundary of his States.' 

" Here is a broad statement which is not justified by a single condition of existing 
affairs. Never in the history of this frontier was there less cause for 'ill-feeling' 
than there is to-day, and there is no more ill-feeling commercially and socially than 
there is between New York and Brooklyn; hence the 'consequent estrangement' is 
no more or less than genuine fol-de-rol. No more amicable condition is possible to 
exist than is existing to-day. The above statement, though, is the groundwork for a 
bombastic appeal for the abolition of the Zona Libre. 

"The statements of Mr. Morehead are too many to have their absurdities exposed 
in a newspaper article, but as his basis is all wrong the superstructure must neces- 
sarily be false and visionary, as a few statements of facts will show. 

"The Zona Libre is a belt of land along the Mexican side of the Rio Grande, 
13 miles wide, and not some 43 miles wide, as stated by Mr. Morehead, into 
which foreign goods can be imported almost free of duty. Under the operation 
of actual conditions that belt is the great mart in all Mexico for goods of American 
manufacture, and when such goods are taken into Mexico the sending of them into 
the interior of Mexico has to take place under the immediate care of officers of the 
revenue service of Mexico. In this Free Zone American manufactures have success- 
fully competed for the trade to the exclusion of foreign goods. To close the Zona 
Libre, or Free Zone, is simply to kill oft' this large trade in American fabrics. Why? 
Because the Mexican taritt" would exclude American fabrics, and nothing but the 
lower priced foreign goods could enter and pay duties in competition with the fab- 
rics of Mexico. American goods would be upon the American border to be smuggled 
into Mexico, but while the Zona Libre lasts Mexico is in no danger of such frauds 
being perpetrated upon her revenues, as was the actual condition before the Zona 
was established. 

"To close the bonded system of the United States against Mexico would be to 
force all of the commerce that now travels OA^er American railroads and American 
ships to enter Mexico in foreign bottoms at the i^ort of Tampico and at the mouth 
of the Rio Grande by rail, to be carried to the very same places where it is now taken 
over American lines. The feeling, therefore, which would deprive Mexico of the 
bonded accommodation is one of hatred to Mexico and one of destruction to American 
industries and trade. 

"Mexico is to-day in no wise dependent upon facilities in the United States to 
carry on her trade and commerce with foreign countries, as she formerly was, and 
this changed condition many seem not to understand. The resolution passed by the 
Texas legislature and the Morehead pamphlet, if carried into effect, would positively 
kill every American interest along the Rio Grande and destroy the great and growing 
trade now existing between the two countries. More hatred, malice, and folly, from 
an American standpoint, could not be imagined than those two dangerous papers 
contain." 

Mr. Grain. Mr. Speaker, I further ask leave to read from a communication sent to 
me from some leading citizens of Brownsville in reference to this subject: 

Brownsville, Tex., January 27, 1895. 
The arguments favoring the abolition of the Zona Libre do not apply here. The 
importations into the Zona Libre from Brownsville, Rio Grande City, and Roma are 
chiefly breadstuff's, agricultural implements, and other goods of American produc- 
tion ; hence there is no smuggling back from Mexico to the United States of foreign 



40 MEXICAN FREE ZONE. 

goods. This is abundantly shown by the character of the seizures made by our cus- 
toms officers, which seldom embrace anything but articles of Mexican origin, and 
this no change or modification in the Zona Libre would affect. But our whole trans- 
portation system depends on our continuing to supply Matamoras and the adjacent 
territory with the class of goods tliey now purchase from us. 

If the inhabitants of that section are compelled to pay Mexican import duties on 
their flour, lard, soap, sugar, beans, cotton goods, (dothing, plows, harness, hardware, 
agricultural implements, and machinery, all of which American manufactures they 
now buy from us, they will use similar articles of Mexican origin and ])roduction, 
although of inferior quality and higher lirst cost, because they can get those native 
articles without the payment of import duties. The result is, we lose our market for 
a large and constantly increasing quantity of our own products, and in losing this 
market we so decrease the volume of our trade that we would cease to have direct 
communication by steamer and otherwise with the great centers of American ])ro- 
duction, our own local wants not being sufficient to justify the continuance of the 
steamer line to supply them alone. 

You will thus see the matter is of vital importance to us. We therefore ask you 
to exert all your influence, official, legislative, and personal, to aid us. 

There is another phase of the question. The threat to suspend the operation of 
our bonded system on the northern frontier of Mexico unless that country shall 
abolish the Zona Libre is a very serious one. Suppose (and the supposition is fully 
warranted) Mexico declines to be coercedf Then the American railroads running to 
the Mexican frontier lose the carrying of the best paying and most valuable portion 
of their traffic, as the transportation of all goods of European origin would be forced 
into vessels direct to Mexican ports, and not only our railroads but our coastwise 
carrying companies would suffer severely, and in order to fully load those vessels for 
Mexican ports direct the jMexican merchant would be compelled to purchase in 
Europe many goods he now procures from the United States. 

In point of fact, the suspension of our bonded system to the northern frontier of 
Mexico would benefit only European producers, merchants, and carriers, and would 
work a corresponding injury to those interests of our own country. 
We are, very respectfully, 

Thomas Carson. 
James B. Wells. 
John I. Kleiber. 
Wm. J. Russell. 
G. M. Raphael. 
William Kelly. 

The Speaker. The time of the gentleman has expired. 

Mr. Grain. Inasmuch as five minutes of my time has been interrupted by the 
receiving of a message from the Senate, I will ask an extension of five minutes. 

The Speaker. The Chair hears no objection. 

Mr. Crain. Mr. Speaker, I just wanted five minutes to explain the proposition sub- 
mitted by the gentleman from Indiana [Mr. Bynum]. He has stated to the House 
that this will not affect the importation in the Free Zone of American goods. If 
gentlemen will examine the resolution, they will find that it is distinctly stated that 
until the Free Zone is abolished the bonded system of the United States shall be sus- 
pended as to Mexico. Now, if the Free Zone is abolished, then American goods 
going into Mexico have to pay the full rate of duty. That is all I have to say, Mr. 
Speaker. 

The previous question was then ordered, and under the operation thereof the 
Senate amendipent w^as concurred in. 

On motion of Mr. Cockrell, a motion to reconsider the vote by which the Senate 
amendment was concurred in was laid on the table. 



Mr. Sutton's opinion on the Free Zone. 

[The New York Evening Post, May 19, 1894. The Free Zone. Agitation of Texas citizens for its 
abolition. "What the Zone is; advantages which Mexicans have under existing conditions.] 

Washington, May 19, ISM. 
The agitation by citizens of Texas in favor of abolishing the Free Zone between 
this country and Mexico has got as far as a resolution of inquiry brought into the 
House by Representative Crain, calling for the correspondence between our Govern- 
ment and that of Mexico on the subject of the Zone. Warner P. Sutton, who for 
many years was a consul-general of the United States in Mexico, was asked by the 
Evening Post correspondent to-day for some account of the Free Zone. 



MEXICAN FREE ZONE. 41 

"It is a narrow strip of territory," he answered, " nowhere more than 12|^ miles 
wide, along the northern border of Mexico. Into the ports of the Zone goods may 
be imported on payment of only 10 per cent of the regular duty. The peo))le on the 
Mexican side of the border can thus get French wines, liquors, silks, and laces and 
similar goods from other foreign countries cheaper than those on the American side. 
The merchants on the Mexican side have to pay only one-tenth of the Mexican duty 
on these goods, while those on our side pay the whole of our duty. As a consequence, 
there is a strong temptation for residents on the American side to buy these things 
on the Mexican side and run them over without paying duties. A substantial 
advantage is reaped in this way by the Mexican merchants. 

"This advantage, however, is largely offset by the high taxes levied on the Mexi- 
can side. They have a stamp tax there which would make the internal-revenue 
provisions of the Wilson-Voorhees bill green with envy; and every time a dollar 
shows itself it is loaded with a new tax. If one or two houses go out of business, 
their tax is usually added on to the quota of those remaining, so that the Zona Libre 
benefits are largely eaten up by higher taxes. 

"Aside from the class of European goods I haA'^e mentioned, we supply this fron- 
tier market with nearly everything sold there. Take it all around, we probably 
outsell the rest of the world three to one all along this border line of Mexico from 
the Pacific Ocean to the Gulf, As our goods are free on our side and pay 10 per cent 
of the high Mexican duty on the Mexican side, our merchants can and do compete 
with the Europeans in everything we produce. We almost hold our own against 
many European goods. 

"These conditions must reflect themselves in the prosperity of the towns on the 
two sides of the border? 

"They do. Matanioras, which was formerly the gate to Mexico, has now very 
little business ; Brownsville, on our side of the river, has it all. Nuevo Laredo, 
Mexico, has less business every year, while Laredo, Tex., gains steadily. Most of 
the chief buyers of Nuevo Laredo come over and buy groceries, dry goods, furniture, 
etc., on the American side, and get them across on verbal permits or on the regular 
invoices of importers. The largest stocks are carried on the American side. There 
are two or three large stores on the Mexican side; but even with the Zona privilege 
the advantages, except on a few lines of European goods, are with our people. At 
Piedras Negras and Eagle Pass business is about equally divided; but this is because 
the railway shops are located on the Mexican side. At El Paso, Tex., and Juarez, 
Mexico, the American side has three times the trade of the Mexican side. 

"In all these cases the Rio Grande is the boundary, is it not? 

"Yes; but at Nogales, Ariz., and Sonora, Mexico, the boundary is an imaginary 
line, and you have to get your bearings by the hills and other landmarks from time 
to time to tell whether you are in Mexico or the United States. This gives rise to 
many oddities. One dramseller has the line running through his barroom. As the 
license laws are easier in Mexico he has his drinking bar on that side, and his cus- 
tomers cross the room into the United States to wipe off their perspiration, 

"The idea of abolishing the Zona Libre is not new? 

"By no means. It has been discussed for thirty-five years at least. During our 
civil war the free belt made Matamoras the third port in the world. As we have 
increased our production of goods which Mexico needs, the benefits of the Zone have 
diminished, until now it serves only to keep alive the towns on the Mexican side. 
The Mexicans, except along the border, think no more of it than we do. They would 
he very glad of some convenient way to get rid of it. But they know that if it were 
abolished summarily it would utterly kill out what little mercantile life now 
remains on their side. What ought to be done is to negotiate a treaty by which the 
products of each country, at least in small amounts, could cross the border without 
payment of duties on either side. If that were done, Mexico could afford to wipe out 
the Free Zone and dispense with European goods, 

"How would the summary abolition of the Zone affect us? 

"It would not do for us to urge its abolition without this local free interchange 
of products, because the Zone is now a large consumer of many of our goods. 
Wheat, flour, corn, bacon, lard, et*;., are supplied by us exclusively, as well as many 
other necessaries. So long as the inhabitants of the Zone can import these at 10 per 
cent of the regular duties they can eat them, but if the full duties were exacted 
they would be too expensive. For instance, some 5,000,000 pounds of our flour are 
imported every year at Matamoras, Nuevo Laredo, Piedras Negras, Juarez, and 
Nogales, exclusively for consumption in the Zone, for scarcely a barrel goes into the 
interior. The full duty is more than 2 cents a pound on wheat and 4 cents on wheat 
flour. Those who live in the Zone can pay 10 per cent of this duty and eat our flour; 
those farther back have to buy Mexican flour or eat corn meal. 

"How would you advise going about the improvement of present conditions? 
_ " AVhat we have long needed in our relations with Mexico is to put political ques- 
tions in the background and study and treat with Mexico on a friendly commercial 

H. Eep. 702 4 



42 



MEXICAN FREE ZONE. 




basis. Do yoii know that we have absolutely no treaties Q 015 832 318 7 

Mexico to-day except an extradition treaty — an extremely ^ ^ 

back in 1861? It is high time to negotiate at least a coujmercial treaty. Mexico 
needs onr products and has always been disposed to meet iis halfway. Too much 
protection buncombe by one party and too much free-trade theorizing by the other 
have prevented our doing live or ten million dollars' worth of commerce with Mexico 
every year, to the great benefit of both countries. 

" We had the Grant-Eomero treaty in 1883. I worked on that with General Grant, 
and hoped that even so small a step in the right direction would be followed by 
others. The House proceeded to pitch the treaty out of court, while some individ- 
uals added insult to injury by saying mean things about Mexico. We ought now to 
pass a general resolution reciting what should be done, intrust the plan to a non- 
partisan commission to work out, and, when they have made a report, enact the 
necessary legislation promptly, with such conditions that it will stay in force not 
less than ten years. 

"Why not have complete free trade with Mexico as our next neighbor? 

" It would be idle to talk about that for the present. Mexico is too poor even to 
consider such a suggestion. She could aft'ord, however, and I believe would be 
willing, to try a system of limited reciprocity, with such local border interchange of 
national products as would enable her to abolish the Zona Libre. Both countries 
would reap the advantage of a cessation of smuggling, and Mexico would be enabled 
to do away with most of her interior customs guards and save a half million dollars 
or more in salaries every year. Along with such a system some articles could be 
made free in each country and a few others given lower duties. The subject is of 
great importance, and one to which I have given much study for fifteen years. I 
earnestly hope a change in present conditions will be inaugurated soon." 



